May 2021 Lumber and Commodity Report
The RoMac Building Supply Wood Commodity Index (Index) for May 2021 jumped 20.3 percent to $1,405.25 per thousand, as demand for wood products and trucking woes gave pricing no room to drop. Supply and availability of building products in the supply chain, as well as a tight labor force, are keeping demand from exploding. Builders are stressed with increasing backlogs because material slow downs are impeding production. It is important to note, higher pricing and tight labor is not making the demand evaporate. For every person that cancels a project or order, there are three behind them that will take their spot.
The dimensional portion of the Index increased 26.6 percent and that is a good average for most items – it was across the board. 2×4 x 92-5/8 regular spruce wall studs were up 26.9 percent while specialty sized length studs increased in the lower 30 percent range. Harder to find sizes became harder to find which may force builders to standardize plans. Dimensional spruce increased in price from 25.9 to 27.5 percent. This last week the momentum slowed on increases and this may indicate a top. Pine dimensional lumber increased as well with 2×4 pine adding 20 plus percent and most wide width pine increased 21 percent. Quick shippers are selling products for premiums as longer lead times are causing havoc in the supply chain.
The sheathing portion of the Index increased 14.8 percent to $1,301.88 per thousand and just like the lumber side, the increases were universal across CDX pine plywood and OSB sheathing. OSB on average increased $7.36 per sheet while CDX pine added $4.80 per sheet. It is very concerning that prices are high and supply is tight for sheathings going into hurricane season. That is not a good place to be.
The wood commodity markets are at record highs, but increases are slowing. With summer vacations upon the industry and supply chain delays continuing, there is probably an opportunity for the markets to drop in price, but do not expect any collapse. A retreat to early spring pricing is very possible, but as the pandemic resolves itself in the second quarter, demand could really heat up in the 3rd and 4th quarters. The markets are poised to remain high, and this is without a hurricane. Builders should include price escalation clauses in their contracts and bid projects on the high side to cover cost. Plus, know your delivery times and plan accordingly. In short, the markets will remain very challenging.
Don Magruder is the Chief Executive Officer of RoMac Building Supply in Central Florida, 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 through our contact page.