June 2023 Lumber & Commodity Report
By Don Magruder
The RoMac Building Supply Wood Commodity Index (Index) decreased in mid-June from the previous month by .7 percent of less than $3 per thousand. The Index for June was $429.90 with heavy declines in CDX pine plywood keeping the Index from another month of improvement. Based on the activity of the last 2 weeks, it does appear the wood commodity markets are trying to build in more activity and these markets are searching for momentum.
The lumber portion of the Wood Commodity Index increased 2.3 percent or 10.21 per thousand as dimensional spruce and spruce studs added $10 to $55 per thousand depending on size. Curtailments in British Columbia and the historic forest fires are starting to put pressure on supply, plus the markets have been languishing for months in the doldrums searching for a spring surge it never got. As the spruce market improved in pricing there was a retreat in pine with 2x12 capitulating $10 to $30 per thousand and plus $50 declines in 2x4. If demand does improve, these declines should slow and reverse later in the summer.
The sheathing sector of the Index witnessed a clear price capitulation in CDX Pine plywood with a $60 per thousand retreats, but OSB sheathing which was heavily discounted in the spring managed to add a meager $5 per thousand. The CDX pine plywood mills finally accepted the fact the spread between CDX and OSB was too much as builders who may have preferred CDX would not continue to buy this product with OSB almost $200 per thousand less. Affordability with higher interest and labor costs is driving many supply decisions.
Housing demand and settling out of the economy nationally does point to improved conditions, but concern is growing in Florida over the new immigration bill passed by the Florida legislature and signed by Governor DeSantis. Reports are abounding that undocumented workers are leaving the state in droves ahead of the July 1st punitive measure adopted by the state of Florida. The new home market in Florida is facing the prospect of surging demand in the second half with reduced capacity to produce new homes due to a lack of labor. Some suggest this new law could create huge gaps in labor across the state.
Builders, it is imperative now that you ensure you have the crews to perform the work you have contracted because if this immigration law does have a negative impact on Florida as many fear, labor rates will soar as builders start bidding wars for subcontractors. Hopefully, a remedy will be found.
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.