November 2022 Lumber & Commodity Report
By Don Magruder
The RoMac Building Supply Wood Commodity Index (Index) for November dropped 4.7 percent to $427.00 per thousand and once again, that is despite another hurricane making landfall in Florida. One notable point about this month’s Index was the pricing levels were not in unison in their decrease and in fact, many items increased, plus the drops were in a normal trading range. This indicates the wood commodity markets are nearing levels that will probably cement a new normal range plus or minus $30 per thousand. There is a growing belief further price capitulations will increase the likelihood of accelerated mill curtailments.
The lumber portion of the Index dropped 4.4 percent to $450.49 per thousand with spruce retreating in the most popular sizes. 2×4 spruce dropped $15 to $45 per thousand depending on length, but notably, longer lengths were flat to up $5. 2×6 spruce was down $20 to $25 while suds followed the same range. Wide-width pine pricing increased from $25 to $40 per thousand while 2×4 pine retreated somewhat. Overall lumber pricing was mixed in the pricing moves.
The sheathing side of the Index was mixed as well. For the second straight month, OSB sheathing had no movement in pricing as mills dug in and refused to capitulate. CDX pine plywood retreated $30 to $85 per thousand to get within range of competing with the lower OSB numbers. Interestingly, over the last couple of weeks, CDX pine plywood has flattened out in pricing which further indicates those producers are nearing a bottom.
Energy, fuel, and labor costs continue to remain high and increasing which is causing real fixed cost issues for mills and manufacturers. While the demand equation has eased and flattened over the last few months, it appears the worst of it may be over as inflation fears ease and buyers start eyeing the benefits of taking advantage of current mortgage rates versus those which may be available in the spring. With the mid-term elections over, the negativity of the politicians may subside a little which could bolster the mood of homebuyers.
I expect the markets to trade in the next few months of narrowing range and don’t be surprised if the markets go back to a more normal spring-run situation in late February. Builders should be wary about quoting November and December pricing for projects starting in March.
Finally, to all the readers, I hope you and your family have a blessed and wonderful Thanksgiving.
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.