March 2023 Lumber & Commodity Report
By Don Magruder
The RoMac Building Supply Wood Commodity Index (Index) for mid-March 2023 retreated 4.1 percent to $387.93 per thousand after a huge 17.5 percent increase from the previous month. This reset probably suggests the mills and manufacturers go ahead with their spring order files with a more speculative tone, and this retreat suggests real demand and orders will drive the markets. As we delve inside the numbers of this month’s Index, that holds true with certain sizes increasing in price while others retreated. Actual demand and order files will drive the markets, unlike the ludicrous speculation of just a year ago. With regard to last year, the Wood Commodity Index is down $635.34 per thousand or 62 percent. To illustrate the huge deflation in lumber and sheathings since last March just look at these prices. 15/32” CDX pine plywood is down $20.32 per sheet while 7/16” OSB sheathing has dropped $19.68 per sheet. 2x4- 92 5/8 spruce studs are down an unimaginable $3.56 per board. After 40-plus years in the lumber industry, I live by one motto - what you think is reality today can be totally changed 6 months from now. Here are the notable movers on this month’s Index.
2x4 Spruce studs were down $20 to $35 depending on length while 2x6 studs added $50.
Dimensional 2x4 and 2x6 spruce dropped $55 to $65 per thousand as price increases did not match the activity on the ground.
2x12 pine was the strongest part of the market adding $55 to $155 per thousand as buyers had to search out sources. Heavy rains in the south and continued good demand kept pricing strong.
2x4 pine was flat to up as treaters kept demand solid.
Both CDX pine plywood and OSB sheathing added $5 per thousand as manufacturers were slow to retreat as most felt the price capitulations had hit bottom.
Uncertainty with interest rates and financial institutions could dampen demand, but the overall housing shortage in America persists. The National Realtors Association projects a four-plus million deficit in homes available in America with affordability tapping down demand. The dynamics are making for a strange housing market. Builders should buckle up until there is more clarity.
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.