April 2023 Lumber & Commodity Report
By Don Magruder
The RoMac Building Supply Wood Commodity Index (Index) for mid-April 2023 jumped 5.9 percent to $410.93 per thousand as the market regained the previous month’s 4.1 percent decline plus an additional almost 2 percent. In mid-March, the uncertainty of the banking crisis was at its zenith, and this put shivers in the housing market causing many builders, investors, and suppliers to tap the brakes. The banking crisis slowed the rising momentum of housing in March. However, the further removed from this event, the demand grows, although many builders remain cautious. This could foretell a busier late spring and early summer rally in housing as interest rates stabilize and this is probably being reflected in the wood commodity prices regaining last month’s losses.
The lumber portion of the wood commodity index was mixed and somewhat odd with this side of the composite increasing 2.4 percent or $10.32 per thousand. In the dimensional spruce market, longer lengths retreated in price, but shorter lengths and studs showed modest gains. This could be more of the influx of longer-length European wood and the overall supply situation by length- not sure. Spruce studs were up $5 to $45 per thousand depending on length, and dimensional spruce saw 8- and 10-foot 2x4 lengths increase $20 to $25 while longer lengths dropped $10 to $45. This is a new phenomenon that is inexplicable. 2x4 pine added almost $60 per thousand while 2x12 pine was very strong adding $90 to $100.
The sheathing side of the Wood Commodity Index was a tale of two different markets. CDX pine plywood was flat and odd that ½ CDX priced the same as 5/8 CDX for the second straight month. This is unusual. OSB sheathing was up $45 per thousand or $1.44 per sheet across the board. OSB continues to be significantly under CDX pricing, which was on par just a year ago. There are oddities in these markets which make little sense. Overall, the sheathing portion of the Wood Index increased 9.0 percent or $32.48 per thousand.
If there are no more unforeseen bank failures or economic shoes to drop, I expect a general improvement in the housing market especially in Florida, and the more uncertainty is driven out of the market the better it will get. Easing of inflation, Federal Reserve stabilization of interest rates, and confidence in the banking system may give the boost in housing many expected earlier in the year. Builders should expect pricing to firm a little in the near future and, keep an eye on demand, this will determine how fast the markets will increase and to what level.
The RoMac Wood Commodity Index is a weighted lumber and sheathing composite based on usage in Central Florida. By using wholesale pricing, the Index is a good indicator of the pricing direction for the next 30 days.
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 a past Associate Vice President of the Home Builders Association of Lake County.