Tag Archive: lumber commodity

  1. February 2020 Lumber and Commodity Report

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    February 2020 RoMac Lumber and Commodity Report

     

    February 2020 RoMac Lumber and Commodity Report

    By Don Magruder

    I wrote the following in January’s report:

    The milder weather, strong economy, and continued demand suggest inflation in the short-term. Signs are pointing to a stronger price run-up than that in 2018. Some of this will be driven by mills and manufacturers who have committed to either raising prices or curtailing production.

    That statement holds true month later, and the 0.6 percent decline that occurred in January has been replaced by a sharp increase in price.

    The RoMac Building Supply Wood Commodity Index (Index) for February increased a whopping 16.4 percent, or $53.18 per thousand. This increase is one of the largest monthly increases in the Index in several years. All but one item in the Index—2×4-16 treated pine—increased in price. While the majority of the other items soared double digits, narrow width pine dropped 1.8 percent as supply outstripped demand.

    The lumber portion of the Index increased 8.4 percent to $440.60 per thousand. 2×4-92 5/8 spruce studs surged 18.2 percent while other size studs added anywhere from 5.1 to 15.3 percent. Dimensional 2×4 spruce was solidly up from 7.4 to 14.5 percent, depending on specified lengths, while 2×6 spruce added 11.4 percent for 10-foot lengths and 4.1 percent for 16-foot lengths. Overall, the direction was upward with little sign of a retreat.

    The sheathing portion of the Index added 25.6 percent to $330.94 per thousand. That is an increase of $67.41 per thousand, or an average price increase of $2.16 per sheet. These increases were brutal. Mills are controlling supply to keep from getting ahead of demand, and the mild winter is opening a window of price opportunity. The market must sort out whether this is just a case of premature enthusiasm or a real housing improvement—my guess is that it is premature enthusiasm.

    Until the real housing numbers indicate the market is building upon late season improvements and the threat of the Coronavirus subsides, builders should be cautious that the premature enthusiasm by mills and manufacturers on pricing will stick. An unexpectedly mild winter can move work scheduled for March and April up to February with no real growth in the market. A lot of times, builders and suppliers make the mistake of thinking this year will be different instead of understanding the calendar has been accelerated.

    If the increases over the last 30 days plateaus in the next couple of weeks and then begins to wane, it will be a case of premature enthusiasm and a possible slower springtime market. Let’s hope for the best and that this spring will be different.

    Don Magruder is the Chief Executive Officer of RoMac Building Supply 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 don.magruder@romacfl.com.

  2. January 2020 Lumber and Commodity Report

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    Lumber purchased at Romac Building Supply

     

    January 2020 RoMac Lumber and Commodity Report

    By Don Magruder

    Although it is mid-January in Florida, the weather feels like late spring. The good weather in Florida and milder temperatures in the South have not been enough to fire up the wood commodity markets.

    The RoMac Building Supply Wood Commodity Index (Index) for January 2020 decreased 0.6 percent to $324.65 per thousand as gains in dimensional lumber were offset by declines in plywood and sheathing products. The markets are struggling to find a direction as demand is not strong enough, even with milder weather, to kick off the spring selling season early. The markets should be gaining pricing steam by month-end, so now is not the time to bid projects at pricing from December or early January.

    The dimensional lumber portion of the Index was up 2.1 percent to $398.15 per thousand as spruce increased in pricing from flat to 2.8 percent. Only two items retreated, giving back $1 per thousand, while 2×4-16 treated handed back 1.8 percent. Since last month, wide-width 2×12 pine was up $22 to $37 per thousand, making it the largest price mover in the Index. The run-up in wide-width pine suggests an aggressive spring pricing season.

    The sheathing portion of the Index declined $9.52 per thousand (or 3.5 percent) as both OSB sheathing and CDX pine sold for lower prices on the wholesale markets. OSB sheathing was down $10 per thousand while CDX pine plywood was mixed with decreases from $5 to $20 per thousand. This may be a scenario in which the sheathing markets take the lead from lumber and start picking up the pace later in the month. Little doubt, these prices are near the bottom of the market for springtime—they should not be the base pricing for projects bid in March.

    The milder weather, strong economy, and continued demand suggest inflation in the short-term. Signs are pointing to a stronger price run-up than that in 2018. Some of this will be driven by mills and manufacturers who have committed to either raising prices or curtailing production. Builders should put a Price Adjustment Clause in their contracts and seek price protection for the next few months as pricing could get much hotter.

    Don Magruder is the Chief Executive Officer of RoMac Building Supply 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 don.magruder@romacfl.com.