As mid-January 2021 came upon us, it seemed like supply and demand for softwood lumber and panel products reached an equilibrium. Almost all prices were flat, except the 2×8 sizes which dropped somewhat.

Players agreed that this current lull could indicate a new level of asking prices at lumber producers and wholesalers. Field inventories with buyers were not at such emergency-low levels as they had been during almost all of 2020, but still no one was stocking up on supply as prices remained high compared to historical trends. The busy home building season is fast approaching; both Canadian and US housing starts data remains extremely rosy. Sawmills expect the usual spring rush of orders to arrive soon enough.
Softwood lumber prices seem to have experienced a peak in the first week of January, due to momentum from demand over the holiday break. By the second full working week of 2021 almost all softwood lumber prices were flat.

Inquiries quieted down last week as buyers pulled back from ordering while sawmills tried to keep prices firm. — Madison’s Lumber Reporter

Demand simmered down in the US Western S-P-F market last week as players compared lumber futures to current asking prices and decided to sit on their hands. Producers remained unworried, maintaining four- to five-week order files at their sawmills and easily selling enough volume each day.

Canadian producers of Western S-P-F lumber were confident that demand would perk back up after the current lumber futures contract expired. Sawmill order files were four or more weeks out.

The supply-demand balance seemed to find an even keel in the second week of 2021, ending January 15, 2021, with benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr prices staying flat at US$944 mfbm over the previous week, said Madison’s Lumber Reporter.
Last week’s price is +$292, or +45%, more than it was one month ago when it was $652.

Stocking wholesalers on the busy US Eastern Seaboard thought that the aggressive ascent in prices had perhaps come and gone. One thing was for sure in vendors’ minds however, this was a supply-driven rally; when usually the impetus comes from the demand side. Meanwhile, a large contingent of builders in the US Northeast were unwilling to start more construction jobs due to lack of materials, and of payment delays as credit lines stretch to breaking points. — Madison’s Lumber Reporter

Compared to the price one-year-ago, of US$402 mfbm, last week benchmark softwood lumber item Western S-P-F KD 2×4 #2&Btr was selling for US$944 mfbm which is +$542, or +135% more.

The above table is a comparison of recent highs, in Sept 2020, and current January 2021 benchmark dimension Softwood Lumber 2×4 prices, compared to historical highs of June 2018 and compared to recent lows of Sept 2015:

Continuing the bumpy road through 2020, Canada’s sawmill capacity utilization rates dropped again in October while those in the US remained relatively flat.

Compared to one-year-ago, for January – October 2020 softwood lumber production in the US improved further over the previous year, up another +2.7%, says the latest issue of the Western Wood Products Association’s monthly Lumber Track. In the first ten months of this year, US lumber production volumes were 30,643 mfbm compared to the same time in 2019 when it was 29,838 mfbm. Looking at the month of October against September 2020, US softwood lumber production increased by +7.3%, at 3,225 mfbm in October compared to 3,005 mfbm for September 2020.
Last month’s update here: https://madisonsreport.com/2020/12/09/north-america-softwood-lumber-production-sawmill-capacity-utilization-wwpa-september-2020/
While still down, Canadian softwood lumber production for most of 2020 started to recover manufacturing volumes in the latter months of last year.
After reaching terrible lows for a large part of 2020, softwood lumber production in Canada recovered further in October. Manufacturing volumes were down -6.2% for the first ten months of 2020, to 19,184 mfbm, compared to January – October 2019 when it was 20,450 mfbm. Reversing improvements of the previous month, comparing the month of October to September 2020, Canada softwood lumber production dropped slightly, down by -1.4%, at 2,099 mfbm for October 2020 compared to 2,129 mfbm in September.

For British Columbia alone, sawmill production volumes for year-to-date 2020 fell yet further, down by another -11.2% to 7,412 mfbm, compared to January – October 2019 when it was 7,412 mfbm.

North America Softwood Lumber Production, Sawmill Capacity Utilization, WWPA: October 2020

US sawmill production as per cent of practical capacity for January to October 2020 continued, at 85%, as it was the previous month and in the first ten months of 2019, said the Western Wood Products Association’s monthly Lumber Track.
After improving from July to September Canadian sawmill production as per cent of practical capacity dropped back in October 2020, to 76% compared to September 2020 when it was 86% and compared to October 2019 when it was 79%.

North America construction framing dimension softwood lumber and panel prices used in Canadian and US home building. Explanation of the seasonal cycle for softwood lumber buying as well as investment the sawmills need to make for their feedstock — log supply and inventory.

Compared to the price one-year-ago, of US$402 mfbm, last week benchmark softwood lumber item Western S-P-F KD 2×4 #2&Btr was selling for US$944 mfbm which is +$542, or +135% more.

Unstoppable demand over the Holiday Season pushed prices relentlessly higher, for the week ending January 8, 2021 benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr prices rose to US$944 mfbm, which is up another +$70, or +8%, over the previous week, said Madison’s Lumber Reporter.
Last week’s price is +$324, or +52%, more than it was one month ago when it was $620.

In the first full week back to work of 2021, the latest data of housing construction and home sales out of the US shows a marked increase over the previous year. The economic indicators for future home building, and remodelling, are rosy.

Macroeconomic conditions in the US remain murky, however there are two things that can be solidly stated even at this year part of the year: one is that home builders are reporting difficulty in finding lots for purchase. The other is that there is challenges finding additional workers to hire. Indeed, the latest US data release shows the 472,500 new residential construction jobs created from May through December 2020 offset the 456,800 jobs that were lost in April and May. As well, for full-year 2020, home building and remodelling added 57,200 net jobs in the US.
While it’s too early in the year to say where the lumber market will go, it can be assured that prices will not go down during 2021.

Lumber sales barely missed a step over the holiday break. As 2021 dawned, rail service got significantly worse.

— Madison’s Lumber Reporter

The traditional slowdown associated with the Holiday Season was much shorter and smaller in magnitude than in previous years, according to Western S-P-F purveyors in the US . Demand did not wane; producers boosted their asking prices by double digits or more.

Canadian Western S-P-F producers reported demand tapered off at the end of 2020, partially due to lockdowns and curfews in Quebec, so sawmills tried to focus on selling into the US market. However, persistent lack of rail car supply caused logistical headaches, pushing delivery times into mid-March. Sawmill order files were already into the first week of February.

Compared to the price one-year-ago, of US$402 mfbm, last week benchmark softwood lumber item Western S-P-F KD 2×4 #2&Btr was selling for US$944 mfbm which is +$542, or +135% more.

Unstoppable demand over the Holiday Season pushed prices relentlessly higher, for the week ending January 8, 2021 benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr prices rose to US$944 mfbm, which is up another +$70, or +8%, over the previous week, said Madison’s Lumber Reporter.
Last week’s price is +$324, or +52%, more than it was one month ago when it was $620.

Sales of Eastern S-P-F in Eastern Canada were comparatively slow to start the New Year but by Tuesday of last week business picked up. Although numb to sticker shock by this point, buyers nevertheless did double takes at more triple-digit price increases, as they assessed their bare inventories and calculated their next moves.

— Madison’s Lumber Reporter

The above table is a comparison of recent highs, in Sept 2020, and current January 2021 benchmark dimension Softwood Lumber 2×4 prices, compared to historical highs of June 2018 and compared to recent lows of Sept 2015: