March 2019 Lumber and Commodity Report
Whole House Commodity Index – March 2019
By Don Magruder
Momentum in the wood commodity markets is waning. The RoMac Building Supply Wood Commodity Index (Index) since mid-February retreated 2.0 percent to $340.24 per thousand as mills accused the weather of tapping down demand. The next 30 days will probably determine if winter weather or a timid new home consumer is the reason for erosion in the demand equation. Based on the flood of up-and-down housing reports, many suspect the housing cycle could be faltering.
The dimensional wood portion of the Index dropped 4.0% to $407.85 per thousand as dimensional spruce dropped 4.3% to 9.8% depending on width and length. $30-plus per thousand corrections were common. These prices also take into account the recent shutdowns and curtailments. There is wood needing homes and carpenters. Expect downward pressure to increase if demand does not warm up in the next 30 days.
The sheathing portion of the Index increased 0.3 percent (or less than $1 per thousand). That is very telling for this time of year. 1/2” CDX pine added $2 per thousand while 5/8” CDX increased $5. OSB had no change from the prior month. Nothing is happening to move this market — uneventful is the best description.We should see these markets increase the next 30 days as springtime comes into full bloom. If we don’t, I expect housing forecasts to be lowered. Builders should be wary of short-term price increases. Although there is little momentum at this time for a big run up, that could change. This is the one time wherein builders should root for higher prices, because that means more homes are being sold.
Don Magruder is the Chief Executive Officer of RoMac Building Supply in Central Florida (romacfl.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 firstname.lastname@example.org.