By Don Magruder
The RoMac Building Supply Wood Commodity Index (Index) for January soared a whopping 39.3 percent to $1013.61 per thousand since mid-December as lumber and sheathing prices rose unabated with heavy demand, tightening supply, supply chain disruptions, continued issues with trucking shortages, and much higher costs. No items decreased in price and wide-width pine nearly doubled in price. To have wood commodity prices jump during the holiday season is truly amazing and does not bode well for pricing in 2022.
The dimensional lumber portion of the composite rose an unimaginable 40.0 percent to $1,182.32 per thousand. Spruce studs increased 34.8 to 53.5 percent depending on the length and width while dimensional 2×4 #2 SPF added 32.6 to 38.0 percent. 2×6 SPF jumped 31.7 to 32.6 percent depending on length. 2×4 pine jumped in the plus 50 percent range while 2×12 wide-width pine rocketed up 83.6 to 97.4 percent. Tight supply, treating manufacturers entering the market for spring buys, and an overall lower inventory in the field really pushed pine.
The sheathing portion of the composite fared somewhat better, but the price increases were still dramatic as the sheathing composite rose 38.7 percent to $887.58 per thousand. CDX pine was up 23.3 percent to 27.6 percent which translates to $6.30 for 15/32 CDX per sheet and $11.04 per sheet increase for ¾ CDX T&G. OSB sheathing jumped $255 per thousand or a little shy of 50 percent. The increase translates into an average sheet increase of $8.16. Plus, order files in both sheathings are extending and could grow worse as winter turns into spring in a month or so.
Here are two very important points for everyone to understand.
The record high lumber composite per thousand costs for the Index was April 2021 when it hit $1302.44 per thousand and this month it was $1,182.32 which is 9 percent below the record.
The record high sheathing composite per thousand costs for the Index was in June 2021 when it hit $1,373.51 per thousand and this month it was $887.58 which is 35.0 below the record.
These markets can still go higher, and these numbers do not include the increased costs in freight which are hitting every dealer like a ton of bricks in January.
While the cold, winter weather could slow the markets in the next week or so, this may be temporary based on the capacity and the demand equation. Builders should plan appropriately and bid on projects on the high side. Believe it or not, you could be paying a lot more in March and April. Let’s hope not.
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.