March 2018 Lumber and Commodity Report
LUMBER AND COMMODITY REPORT – March 2018
by Don Magruder, CEO of RoMac Building Supply
The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) for March increased a strong 5.5 percent to $482.12 per thousand and that is on top of the 11.1 percent increase from the prior month. Inflation in the wood commodity markets has been unabated since December and that is even with a very cold and snowy winter in the Midwest and northeast. Increased costs in manufacturing and labor as well as the specter of higher tariffs have fueled these increases as housing demand while solid is not booming.
Since last month, the dimensional lumber portion of the Index has increased 4.3 percent to $533.42 per thousand. Depending on the width and length, price increases varied from 1.9 to 7.8 percent in spruce. Wide width pine added 4 to 7 percent while treated 2×4 pine jumped 8.2 percent. 2×6 spruce was the only item in the Index to decline and it dropped 1.8 percent or $10 per thousand. Since mid-December, the dimensional portion of the Index has increased a whopping 18.1 percent.
The sheathing portion of the Wood Commodity Index has shown no letup in price increases. Over the last 30 days, the sheathing is up 6.7 percent to $443.80 per thousand. The average sheet of OSB and CDX just over the last month has increased 89 cents. The average sheathing price increase for the first part of the year is nothing short of unbelievable, especially given the harsh winter weather. Prices for CDX and OSB have increased on average $95.95 per thousand or $2.97 per sheet, which is 26.5 percent.
The overall Wood Commodity Index is up 22.3 percent since mid-December and that is too much too fast. Emotions about tariffs and supply issues are heightening, which appears to be the primary market movers because overall housing demand does not support these types of increases in this short period. It is also indicative of a supply chain that remains in tatters since the Great Recession.
While wood pricing has settled over the last week or so, there are no indications that prices are going to drop suddenly, especially as the northern areas thaw. These problems could persist to early summer and builders should prepare by implementing a price protection clause in their agreements and updating prices on long-term projects. No builder can cover these types of increases and remain in business.
Don Magruder is the Chief Executive Officer of Ro-Mac Lumber & Supply, Inc. in Central Florida (www.romaclumber.com, 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, email him at email@example.com.