October 2019 RoMac Lumber Commodity Report
The RoMac Building Supply Wood Commodity Index (Index) for October dropped 5.1 percent or $15.92 per thousand. Last month’s 8.4 percent increase from the impact of Hurricane Dorian and the threat of additional storms is quickly waning. Unless there is a major hurricane threat late season or a surprising increase in housing activity prior to winter, mill and manufacturer curtailments are all that stand in the way of the markets finding lower numbers. Only two items—2×6 spruce studs and 2×6-16 spruce—had increases over the last month.
The lumber portion of the Index dropped 2.7 percent with wide width 2×12 pine taking the biggest beatdown. 2×12-16 pine was off $60 per thousand. 2×4 spruce dropped 1.2 to 11.1 percent while 2×6 spruce fluctuated from a positive 1.0 percent to 3.5 percent down. The markets are in a situation in which actual length and width availability will determine the degree of price fluctuation. No doubt, the overall trend is down.
The sheathing portion of the Index was 7.8 percent down as OSB sheathing and CDX pine retreated from hurricane highs. OSB was a solid $25 per thousand down and CDX gave back between $5 and $10. OSB sheathing pricing is nearing recessionary numbers as excess capacity and unremarkable demand are torturing manufacturers. This is the first hurricane season in three years wherein a major storm did not hit the United States. As a result, mills will be forced to price in a typical late fall and winter market. At this point, curtailments will probably do little to prop up these markets.
Builders should reprice old quotes and protect long-term quotes beyond March 2020. The markets will be fluid by species, size, and demand. These markets need the housing market numbers to continue their improvement off the August reports. Momentum in the housing market has not been common over the last few years and there is little believe that trend will change.
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.