March 2022 Lumber & Commodity Report
By Don Magruder
The RoMac Building Supply Wood Commodity Index (Index) is a weighted index that we have been charting since 2000, and it includes a mix of the most popular wood items sold in Central Florida. The Index for March jumped 14.0 percent to $1,358.45 per thousand which is on top of a 17.5 percent increase in February. The last 30 days have been pricey, and every item but 5/8” CDX plywood increased in price. The uncertainty of the Russian invasion of Ukraine and the effect it will have on the demand equation is hard to determine at this point. These high prices could slow the retail sector in the building supply chain which could benefit homebuilders who are looking for any relief.
There are two segments to the overall wood commodity Index. The dimensional lumber and sheathings.
Dimensional lumber jumped 13.1 percent with wide width 2×12 pine adding 27.8 to 29.3 percent in price. Spruce studs pushed upward from 14.5 to 28.3 percent based on the specificity of the items and availability. Many specialty studs are very difficult to source. Dimensional spruce slowed in its price attrition with gains from 9.3 to 12.3 percent. Thawing weather up north should bolster sales, but high gas prices may cut discretionary income which could slow retail weekend projects. Additionally, the price of materials is so high now that many homeowners may limit the scope of their weekend DIY projects.
The sheathing portion of the Index was a different story for CDX pine plywood and OSB sheathing. 5/8 CDX plywood dropped in price by 1.8 percent as builders pulled back from the higher pricing, but 15/32” plywood added 15.0 percent as builders turned to 2×12 pine and 15/32” CDX to make job site headers as LVLs have become almost impossible to source. The OSB manufacturers remain fully in charge adding $185 to $195 per thousand on heavy demand and continued pressures for raw products.
The war, gas prices, and the consumer who is being frightened by high prices could ease supply in the next month as retail demand could soften. The spring selling season is big for most large retailers, and it remains to be seen if a slowdown in retail materializes to offset the thaw up north. One thing is for certain- the markets will remain uncertain. Builders should protect their projects with a pricing escalation clause and plan their project materials well in advance of starting. Don’t expect commodity volatility to ease over the next month.
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.