September 2017 Lumber and Commodity Report
LUMBER AND COMMODITY REPORT – September 2017
by Don Magruder, CEO of RoMac Building Supply
After two land-falling hurricanes striking the United States, the Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) jumped 8.8 percent to $440.13 per thousand. The need for sheathings drove the market upward while quieting down the normal building in Texas and Florida. The structural and building material components generally begin to feel increased volumes a few weeks after the storm.
The sheathing portion of the Index increased 17.1 percent (up $65.20 per thousand or $2.09 per sheet on average) as both OSB sheathing and plywood jumped dramatically in price. For the state of Florida, the trouble is CDX pine plywood as OSB sheathing is not the preferred product in many of the higher wind-zone areas. Additional hurricane activity could strain an already burdensome market, and this week Florida could actually see a spike in sales from suppliers as power and communications are just being fully restored. Expect little relief in sheathing prices no time soon.
Pricing for the lumber side of the composite was down 0.9 percent to $431.73 per thousand, as general building conditions throughout the country appear to be cooling and there are more indications that the U.S.A.—Canada Softwood Lumber Agreement may get resolved by reducing market share instead of heavy tariffs. A lot is still to be decided. Plus there appears to be a greater push for European and Russian spruce at higher prices. Once the heavy rebuilding in the Houston, Texas area gets in full swing as well as the rebuilding in South Florida cranks up, this market may follow.
The real concern for builders should be supply and labor. Pricing may become an actual secondary issue. For certain building material items, demand and trade issues could restrict flow and these hurricanes, especially in Texas and Florida, have already made a bad labor issue worse. This could actually slow jobsite production.
Then there is the reality that hurricane season is not over. Don’t forget, Hurricane Matthew nearly clobbered Florida the first week of October last year and there are no guarantees the country is done with hurricanes. Another hurricane threat or direct hit could be devastating to a supply chain that has not fully recovered since the hurricane.
Builders should stay in close contact with their suppliers on specialty items. In addition, they cannot wait until the last minute to order—they must get prompt decisions from their customers. The next few months could be very challenging for everyone in the building industry in Florida.
Don Magruder is the Chief Executive Officer of Ro-Mac Lumber & Supply, Inc. in Central Florida (romacfl.com), and he is a former President of the Southeast Mississippi Home Builders Association, and past Associate Vice President of the Home Builders Association of Lake County. To contact Magruder, email him at email@example.com.