MADISON’S WEEKLY LUMBER MARKET UPDATE AND OVERVIEW
Provided by: Madison’s Lumber Reporter
Mainstream news developments once again overshadowed North American lumber and panel trading this week as the entire nation of Canada was shocked when a lunatic tried to shoot up the Parliament buildings in Ottawa, ON, Wednesday. Conspiracy theories and fears of terrorism abounded until it was discovered he was a well-known crack user in Vancouver, BC’s, rough downtown eastside area. Despite this drama, prices of most solid wood commodities were generally sideways, according to weekly building materials price newsletter Madison’s Lumber Reporter (http://126.96.36.199/~madisonsreport).
Benchmark dimension lumber item Western Spruce-Pine-Fir KD 2×4 #2&Btr, having waffled by several dollars over the past few weeks, lost $4, or 1.1 per cent, from last week to settle at US$350 mfbm (net FOB mill). This is $2 less than one-month-ago and a $14, or 3.8 per cent, drop over the same time last year. Specialty items like studs and Douglas fir green also lost a little bit of ground, while more tightly-traded panel products actually enjoyed two weeks of gains.
Steadfast panel commodity Canadian softwood plywood 3/8” Toronto popped another $1, after last week’s $8 gain, to C$462 msf while the more glamorous oriented strand board 7/16” Toronto gained another $2 after last week’s $10 surge, to C$230 msf (both net FOB mill).
Traders of most construction framing lumber items in Canada and the US this week described the market as muted. Sales volumes have been quite stable over the past few weeks despite some uncertainty over macroeconomic and social issues. Field inventories remain extremely low as skittish customers continue to ask for extremely specified loads, repeatedly driving producers mad with these picky demands. The only solace for manufacturers is that buyers must return to the table again and again to make small orders. Sawmill order files remain encouraging: out at least two weeks with most operators.
Dreary winter weather is just around the corner, likely hampering timber harvesting in the north and west. As well, commercial items destined for retailers’ Christmas sales shelves will soon start to take precious rail car and truck space, an annual occurrence for the forest products industry.
In company news this week it was Canada’s railways making headlines. Canadian National Railway reported Tuesday its net income surged 21 per cent to $853 million in 3Q as revenues reached a record $3.12 billion. Excluding one-time items, the earnings for the period ended September 30 amounted to $1.04 per share, and compared with net income of $705 million or 86 cents last year, which included a $19-million income tax expense. Revenues grew 16 per cent from $2.7 billion as carloadings increased 11 per cent to 1.47 million and revenue-ton miles were up 13 per cent.
Canadian Pacific Railway reported also Tuesday higher 3Q earnings as revenue rose and its operating ratio, a key efficiency measure, improved from a year earlier. Net income rose to $400 million, or $2.31 a share, from $324 million, or $1.84, a year earlier. Revenue rose 9 per cent to $1.67 billion.
For it’s part, Union Pacific railway saw their highest car-loadings so far this year in September, and issued a statement this week detailing the difficulty of serving increased demand for rail cars in the Pacific Northwest region. Crew shortages have only made things worse, and the railway intends to reallocate some personnel to that area. In addition, training crews are expected to graduate and be added to the workforce.
LUMBER FUTURES COMMENT: Better Housing
Lumber Futures made new two week lows but then bounced on better Housing numbers out of the US. Soft cash prices on slow demand gapped Lumber lower on Monday. Follow through selling off the bearish start to the week weighed on prices through Wednesday setting new two week lows. Profit taking short covering and seasonal buying into chart support set the lows.
US New Home sales showed an increase of 0.2 per cent to a rate of 467K and a 5.3 month supply. Mixed buying pushed Lumber up tripping “stop loss” buy orders near and into the key 100 day moving average of $334.60 setting the highs.
The front November contract closed today at $336.60 up $7.00 and the lead January contract added $6.60 to $338.50 but showed modest gains of $2.00 and $1.80 respectively for the week.
Vice President Forest Products
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Madison’s Lumber Reporter