November 2013 Lumber and Commodity Report
LUMBER AND COMMODITY REPORT – November 2013
by Don Magruder, CEO of RoMac Building Supply
The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) for November increased 0.2% to $330.21 per thousand from October primarily on the strength of dimensional lumber, which rose 3.9% to $408.49 per thousand. Mills and manufacturers are resisting the lower price levels, as most are still struggling to produce profits. Their fight will grow more difficult as the cold days of winter and the holidays engulf the country.
The dimensional portion of the Index was driven by healthy increases in spruce, which ranged from 3.5% to 9.1%. Narrow-width pine gave back a couple of single digits but the wider pines averaged a 3.0% increase. It appears there is little in the market to push prices in either direction, so expect manufacturers to manage supply to demand.
In the sheathing portion of the Index, manufacturers were unable to hold prices in the first half of the period; however, many have since rebounded. I am not sure if this is a reversal or just a fight back. No doubt–sheathing producers need buyers. CDX pine was down from 2.4% to 5.2% while OSB sheathing dropped 5.9% for thinner panels to 2.1% for thicker panels. Mid-November’s direction will probably determine the general direction for most of the winter.
Mills and manufacturers of wood commodities are going to dig-in their claws in an effort to hang onto pricing levels while manufacturers of other building supplies are making no bones about implementing increases at the first of the year. Unless the economy drastically weakens further, builders should expect higher prices the first quarter of 2014.
Here is my best piece of advice: Do not bid projects in November and December at those months’ current pricing. Pricing could be 3% to 6% higher in March, which makes a price escalation clause a wise part of any contract.
Until next month–wishing you and your family a blessed and Happy Thanksgiving!
Don Magruder is the Chief Executive Officer of Ro-Mac Lumber & Supply, Inc. 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