July 2020 Lumber and Commodity Report
Production delays and crew shortages for train deliveries caused by the COVID-19 pandemic are creating havoc in the wood commodity markets as sections of the country begin reopening. The RoMac Building Supply Wood Commodity Index (Index) for July 2020 increased a whopping 25.8 percent to $498.91 per thousand as dimensional spruce and sheathing rose in price almost unabated. Lead times have pushed out as production struggles to keep up with demand as outbreaks in production facilities and COVID-19 protocols hamper supply.
The lumber portion of the Index increased 25.4 percent to $551.98 per thousand as dimensional spruce became scarcer. Prices increased for 2×4 and 2×6 spruce from 31.5 to 45.8 percent with 2×6 taking the heaviest increase. Until production catches up with demand, expect pricing to remain firm. Wide-width pine 2×12 decreased by 4.7 to 11.6 percent, depending on length, and 2×4 pine was up a modest 1.4 percent. Overall, it has been a wild ride for lumber.
The sheathing portion of the Index increased $94.97 per thousand or 26.1 percent. On average, that is an increase of $3.04 per sheet in 30 days. CDX pine increased in price the most by adding 34 percent for 5/8” and 1/2” thicknesses while OSB sheathing added $67 per thousand or plus 20 percent. South American trade disputes for plywood, delays caused by the COVID-19 pandemic, and increasing demand are pushing pricing for these products upward. These are very high prices for plywood and sheathing as we enter hurricane season and there could be real problems if the country is struck by a major hurricane.
It appears these prices may be firm for a few weeks as the market determines its direction. The increase in coronavirus cases is dampening expectations, and most manufacturing facilities are so behind on prompt shipping cycles it will take longer to resolve. A bad problem could turn into a huge problem nationally if the country is struck by a major hurricane—let us hope not.
Builders should rebid projects scheduled for later in the fall and keep close tabs on pricing through their local dealers. The next few months could be very volatile if hurricane projections come to fruition.
Don Magruder is the Chief Executive Officer of RoMac Building Supply in Central Florida and he is a former President of the Southeast Mississippi Home Builders Association, and past Associate Vice President of the Home Builders Association of Lake County. To contact Magruder, visit our Contact Us page.