Is the construction home building wood panel (Oriented Strand Board (OSB) and Plywood) supply-demand balance reaching equilibrium? We will only know in the coming weeks … check back often.

Compared to the price one-month-ago, when it was C$1,539 msf, for the week ending July 16, 2021, the price of Canadian Softwood Plywood Toronto 9.5mm was down by -$459, or -30%.

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Is the softwood lumber supply-demand balance reaching equilibrium? We will only know in the coming weeks … check back often:

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Compared to the price one-year-ago, when it was US$554 mfbm, for the week ending July 16, 2021, the price of Western S-P-F KD 2×4 was up by +$1.

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US housing starts for June 2021 jumped +6.3% compared to May, at a seasonally adjusted annual rate of 1.643 million. This is the highest in three months amid strong demand from buyers, elevated materials costs, and a shortage of qualified workers.

US Housing Total and 1-Unit Starts June & Benchmark Softwood Lumber Prices July: 2021

For June 2021, total residential starts in the US increased by +49% from the same month one year ago, when it was 840,000. After spectacular increases so far this year, permits for future homebuilding in June were up by +35%, to a rate of fell 5.1% to a rate of 1.6 million units, compared to June 2020 when it was 891,000.
June starts of single-family housing, the largest share of the market and construction method which uses the most wood, was 1.16 million annualized, a +23% improvement compared to June 2020, when it was 891,000. Slowing down from the previous month but improving markedly over one-year-ago, single-family permits were at 1.1 million units, a +32% improvement compared to June 2020 when it was 840,000 units.

Shrewd investors know that construction framing softwood lumber prices are a good leading indicator for US housing activity, including home building and home sales. Don’t miss out, get lumber price data updates directly to your desktop every Friday morning.

As for the lumber market, following a brief lull at a level US$760 mfbm for two weeks, in the week ending July 16, 2021 the wholesaler price of benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr dropped significantly.
That week’s price of US$555 mfbm is down by -$205, or -27%, from the previous week, and is down by -$651, or -54%, from one month ago when it was $1,206.
When compared to the same week last year, when it was $554, that week’s price is up by +$1, or (0%).

Benchmark Softwood Lumber Commodity Western Spruce-Pine-Fir Price: July 2021

Compared to the price two years ago, when it was US$368 mfbm, for the week ending July 16, 2021, the price of Western S-P-F KD 2×4 was up by +$187, or +51%.

STAY AHEAD of US housing price data by getting access to softwood lumber prices. Released every Friday for that week, since 1952 Madison’s Lumber Prices is used by the forest products industry as a price guide for North American construction framing dimension softwood lumber. These are, of course, the inputs into US and Canadian home building materials.

Madison’s Lumber Prices, weekly, are a good forecast indicator of US home builder’s current lumber buying activity ——> DETAILS

US Housing 1-Unit Starts & Permits June and Benchmark Softwood Lumber Prices July: 2021

The latest data from the Western Wood Products Association shows that Canadian and US softwood lumber production and sawmill capacity utilization rates for April continued gains seen in March.
US sawmill production as a per cent of practical capacity for the first four months of this year improved to 88%, compared to the same time in 2020 when it was 83%, said the Western Wood Products Association’s monthly Lumber Track.
Bouncing back closer to normal historical levels, Canadian sawmill production as a per cent of practical capacity rose yet more in January to April 2021, to 84% compared to one year ago when it was a tragic 72%.

Madison’s Benchmark Top-Six Softwood Lumber and Panel Prices: Historical Perspective

July 8, 2021 — The big drops in lumber prices which started around the dual holidays of Victoria Day in Canada and Memorial Day in the US continued for five weeks, until the dual national holidays at the beginning of July. In the following week most lumber commodity prices were essentially flat, indicating a possible stabilization of the supply-demand balance.
Whether these current price levels will hold, no one knows.
Could prices rise again? Or fall more? Only the next couple of weeks will tell.
One thing is for sure though: lumber prices will not return to the “normal” level of around $300 seen over the previous ten years.

Back in May 2021 when lumber prices reached an all-time-ever historical high, and stayed there for a few weeks, customers held off buying in hopes that prices would go down. Now that, eventually, they have done so, there is a not insignificant amount of pent-up demand. At the producers, the goal has been to plump up order files.
Sawmills have been willing to entertain steep counter-offers and sell at lower prices, in order to increase sales volumes and push production out by a few weeks.

“Shaky demand dominated this post-holiday week; many thought a price bottom was close.”

— Madison’s Lumber Reporter

Demand for Western S-P-F lumber was quiet in the US to start the week ending July 8, but demand ramped up as players came back en masse after their July 4th holidays. Prices continued to vary wildly between suppliers at both the primary and secondary levels, and sawmills were more than amenable to counter offers.
Canadian Western S-P-F lumber producers apparently sold decent volumes for the week ending July 8, especially from midweek-on as US customers got back to their desks following the Independence Day holiday weekend. Both primary and secondary suppliers reported steady demand as buyers were in the driver’s seat, throwing out counter offers and shopping around for the best combination of price and shipment terms.

Madison’s Benchmark Top-Six Softwood Lumber and Panel Prices: Monthly Averages

After experiencing huge drops over several weeks, for the week ending July 8, 2021 the wholesaler price of benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr stayed flat, at US$760 mfbm.
That week’s price is down by -$446, or -37%, from one month ago when it was $1,206.

“Green Douglas fir purveyors’ confidence grew that a price bottom was in sight for the market. Demand remained pokey as many buyers continued to watch and wait.”

— Madison’s Lumber Reporter

Compared to the price one-year-ago, when it was US$504 mfbm, for the week ending July 8, 2021, the price of Western S-P-F KD 2×4 was up by +$256, or +51%.

Continuing to recover to the higher levels seen in March, for April 2021 softwood lumber production volumes in the United States and Canada increased yet more. Sawmill capacity utilization rates in the United States and in Canada improved substantially.

Showing more improvement after the gains in March, for January to April 2021 softwood lumber production in the US again gained, up by +4.5% from the first four months of 2020, says the latest issue of the Western Wood Products Association’s monthly Lumber Track.
US lumber production volumes were 12,593 mmfbm compared to the first four months of 2020 when it was 12,048 mmfbm. Looking at the month of April against March 2021, US softwood lumber production was 3,355 mmfbm in April 2021 compared to 3,331 mmfbm in March 2021.

Last month’s update here: https://madisonsreport.com/2021/06/08/north-america-softwood-lumber-production-sawmill-capacity-utilization-wwpa-mar-2021/

MADISON’S LUMBER REPORTER

After extended terrible drops for the past year, softwood lumber production in Canada rebounded spectacularly in January to April 2021, up +16%, to 8,450 mmfbm, compared to the first four months of last year when it was 7,295 mmfbm.
Specifically in British Columbia — which accounts for 50% of Canadian lumber manufacturing and sales — sawmill production volumes for January to April 2021 once again jumped by +25%, to 3,355 mmfbm, compared to the same time last year when it was 2,689 mmfbm.

North America Softwood Lumber Production, Sawmill Capacity Utilization, WWPA: April 2021

US sawmill production as a per cent of practical capacity for the first four months of this year improved to 88%, compared to the same time in 2020 when it was 83%, said the Western Wood Products Association’s monthly Lumber Track.
Bouncing back closer to normal historical levels, Canadian sawmill production as a per cent of practical capacity rose yet more in January to April 2021, to 84% compared to one year ago when it was a tragic 72%.

The Association of American Railroads (AAR) reported July 7 US and Canadian rail traffic volumes for the week of July 3, 2021.

For some rail traffic categories, percentage changes for the current week compared with the same week in 2020 are inflated due to the widespread shutdowns — and subsequent large reduction in rail volumes — that impacted many economic sectors last year at this time.

US railroads originated 1,386,745 carloads and intermodal units in June 2021, up +11% from the same week last year.

Total US combined rail traffic for the first six months of 2021 was 13,334,592 carloads and intermodal units, up +14% from the same period last year.

Regarding North American rail volume for the first 26 weeks of 2021, Canadian railroads reported cumulative volume of 3,921,754 carloads, containers, and trailers, up +9% from the same week one year ago.

Here is a SNEAK PEAK at tomorrow’s print for North American construction framing softwood lumber and panel prices:

After dropping a total of -52.5% from the all-time record high of US$1,600 mfbm — which had held for several weeks — this week the wholesaler price of benchmark construction framing dimension softwood lumber item Western Spruce-Pine-Fir KD 2×4 #2&Btr, for the week ending July 9, 2021, was again US$760 mfbm (net FOB sawmill) as it had been the previous week.

The full Madison’s Lumber Reporter North America softwood lumber price list of 450 individual lumber and panel commodity items is updated first thing Friday mornings Eastern time.

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Key comment: “Douglas-fir and sheet goods’ prices continued to hold on comparatively while the rest of the market cratered further.”

Prices reflect week of June 17, 2021 (CLICK TABLE TO ENLARGE)