As April draws to a close and the usual construction season starts to come on in Canada and the US, demand for softwood lumber remains very hot.
While customers are reluctant to pay these way-beyond record-breaking prices, there is little they can do to avoid buying as ongoing building projects must be completed.

Builders and contractors are anxious to capitalize on their investments, then assess how they will proceed in the future. At time of writing, demand for real estate remains extremely high, so those who paid high prices for lumber are simply passing on those costs to the end-user; the home buyer. While much is being written about what is the ratio of increased building material prices in rising home prices, in the end the real estate customer is not concerned.
Folks looking to buy a home are increasing their bids without blinking; to them whether the price is up nominally due to the cost of materials or due to a very competitive housing market makes no difference. The inventory of new homes for sale keeps dropping. To the real estate customer, these increasing lumber prices don’t matter.

Another bout of triple-digit price leaps did nothing to deter desperate buyers.”

— Madison’s Lumber Reporter

The selling of Western S-P-F in the US retained the strong sense of desperation traders have gotten used to in recent weeks and months. Lumber futures yo-yoed up and down seemingly at a whim, throwing players for a loop as they tried to decide on their next move. Producers reported virtually zero availability any earlier than mid-May even after triple-digit price hikes.

Demand for Western S-P-F got more frenzied in the week ending April 23, according to producers in Western Canada. Experienced players expounded that they’ve never seen anything like it. Canadian sawmills were completely sold out to the week of May 17th and showed only limited availability for May 24th. Buyers who held off in hopes of some form of correction were cursing that decision now as inventories were leaner and prices significantly higher.

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

Pushing still higher than anyone could ever have conceived of, in the week ending April 23, 2021 the wholesaler price of benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr was US$1,330 mfbm. This is up by +$120, or +9%, from the previous week.
That week’s price is up by +$290, or +28%, from one month ago when it was $1,040.

Another crazy week proceeded in Southern Yellow Pine as buyers desperately tried to find coverage. Narrows were in especially short supply, but overall availability remained scant according to traders. Buyers in the West couldn’t find any product available.”

— Madison’s Lumber Reporter

Compared to the price one-year-ago, when it was US$336 mfbm, for the week ending April 23, 2021, the price of Western S-P-F KD 2×4 was up by +$994, or +296%.

More Clean Energy Funding for Remote BC Communities

Natural Resources Canada (NRC) recently announced it will award more than $7 million in funding to Indigenous communities in BC to support their transition from fossil-fuel to biomass-based heating systems. The funding will be distributed through the NRC’s Clean Energy for Rural and Remote Communities program as part of a $175 million initiative to develop and deploy renewable energy projects to reduce the reliance of remote communities on diesel fuel while also providing a stable, local source of economic growth.
Communities that qualify for full funding under the program must contain at least 10 dwellings, fewer than 1,000 residents, and not be connected to the North American electrical grid or gas pipeline network.

Projects receiving funding include:

• $600,000 for the Kwadacha First Nation to create a novel system to convert sawdust from wood chipping into biomass briquettes to provide local heat;
• $379,000 for Chu Cho Environmental to develop its own wood chip-based biomass energy system;
• $799,000 for the Tsay Keh Dene Nation to build a biomass energy plant;
• $474,000 for Gitxsan Energy Inc. to construct two biomass boilers and convert a community building from propane to biomass;
• $586,000 for Twin Sisters Native Plant Nursery to replace a propane heating system with biomass;
• $661,000 for the Lake Babine Nation to install a biomass-based district heating system;
• $108,000 for Skeena Watershed Conservation Coalition to develop a revised energy plan to reduce fossil-fuel consumption;
• $2.3 million for the Tlingit Homeland Energy Limited Partnership to assess the feasibility of expanding local hydroelectric capacity; and,
• $719,000 for the Lhoosk’uz Dene Nation to replace the two diesel generators currently powering the community with a new Combined Heat and Power and battery storage system.

Lignetics Acquires Great Lakes Renewable Energy

Colorado-based Lignetics Inc. recently announced the closing of their acquisition of Wisconsin-based Great Lakes Renewable Energy Inc. Great Lakes is a residential wood pellet manufacturer serving over 1,200 customers, specializing in BBQ pellets, and is the only mill that makes a 5.5mm size pellet. Lignetics is the largest residential wood pellet company in the United States, with 17 manufactories across nine states and one Canadian province.
The company produces residential heating pellets, home grilling pellets, and pet care pellets.

In an effort to make timber prices more responsive to market conditions, the latest changes to BC Timber Sales stumpage rates has that calculation based on recent lumber prices. As these changes start to take hold, the relationship between softwood lumber prices and log prices will become even more apparent.

Madison’s Monthly Lumber and Forestry Data Table

Compared to March 2020 total residential starts in the US last month shot up by +37% to a 1.74 million annualized rate, from 1.27 in the same month one year ago. March starts of single-family housing, the largest share of the market and construction method which uses the most wood, flew up by +37% compared to March 2020, at 1.24 million.
Once again providing good indication for an increase in near-term future home building, US single-family permits, meanwhile, were at 1.2 million, a significant jump of +36% compared to the same month last year.
Sharply increased homebuilding activity is being supported by lean inventories, especially for previously owned homes.

After reaching the seemingly unbelievable level of US$1,060, in the week ending April 2, 2021, the wholesaler price of benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr was US$1,130 mfbm for the week ending April 9. This is up by +$70, or +6%, from the previous week.
That week’s price is up by +$90, or +9%, from one month ago when it was $1,040.

Sales of new single-family houses in the US for March 2021 were at a seasonally adjusted annual rate of 1.021 million, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development.
This is up +21% from the revised Feb 2021 rate of 846,000 and up an astonishing +67% compared to the March 2020 rate, which was at a revised rate of 612,000.

Unrelenting and extremely motivated demand accounts for this incredibly sharp rise. New-home purchases account for about 10% of the market and are calculated when contracts are signed. They are considered a timely barometer of the current real estate market.
Rising further after reaching seemingly impossible highs, in the week ending April 23, 2021, the wholesaler price of benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr was US$1,330 mfbm. This is up by +$120, or +9%, from the previous week when it was $1,210.
That week’s price is up by +$290, or +28%, from one month ago when it was $1,040.

In the week ending April 23, 2021, the wholesaler price of Western S-P-F KD 2×4 #2&Btr was US$1,330 mfbm.

Sales of new single-family houses in the US for March 2021 were at a seasonally adjusted annual rate of 1.021 million, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development.
This is up +21% from the revised March 2021 rate of 846,000 and up an astonishing +67% compared to the March 2020 rate, which was at a revised rate of 612,000.

Benchmark Softwood Lumber Prices Feb & US NEW Home Sales March 2021

Unrelenting and extremely motivated demand is the reason behind this incredibly sharp rise.
New-home purchases account for about 10% of the market and are calculated when contracts are signed. They are considered a timely barometer of the current real estate market.

Softwood lumber prices continued to skyrocket, to US$1,210 mfbm on benchmark commodity WSPF KD 2×4 #2&Btr, up +$894, or +283% in April 2021, compared to one-year-ago when it was US$316 mfbm. A price increase of almost triple what the price was in April 2020 is mind-boggling.
The number of new homes for sale in March dropped slightly, to 307,000, compared to 312,000 in February. However the inventory of new homes-for-sale dropped significantly, at the current sales pace in March it would take 3.6 months to clear the supply of houses on the market, down from 4.6 months in February.
After reaching a high last month, the median sales price of new houses sold in March 2021 dropped to US$330,800, from from $349,000 in February 2021.

Madison’s Benchmark Top-Six Softwood Lumber and Panel Prices: Price Trend

Madison’s is running out of adjectives to describe these non-stop increasing lumber prices. Customers who regularly make large-volume lumber purchases remain underbought and can no longer delay booking orders, as they wait in hopes that prices will go down. Supply continues to be incredibly scarce. US housing starts data for March 2021 has been released; activity is up significantly compared to one year ago. Indeed, permits for total housing starts are up +30% while permits for single-family starts are up +36%. This indicates there is significant upside yet to demand as home construction activity is continuing to increase.
Demand for housing is being driven by Americans seeking more space for home offices and schooling as the year-long coronavirus pandemic drags on. Builder backlogs of projects awaiting construction remain elevated and indicate residential building will stay firm in coming months and contribute to economic growth.

Continuing to surpass any level previously considered normal, in the week ending April 16, 2021, the wholesaler price of benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr was US$1,210 mfbm. This is up by +$80, or +7%, from the previous week.
That week’s price is up by +$170, or +16%, from one month ago when it was $1,040.
Compared to the price one-year-ago, when it was US$316 mfbm, for the week ending April 16, 2021, that price is up by +$894, or +283%. Compared to two years’ ago when it was $336, that week’s price is up by +$874, or +260%.

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

STAY AHEAD of US home sales data by getting access to softwood lumber prices. Released every Friday for that week, since 1952 Madison’s Lumber Prices are 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.
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: https://madisonsreport.com/subscribe.

This week Madison’s was interviewed by a woodworking YouTube channel about lumber prices and what is going on in the market: https://www.youtube.com/channel/UC5-vauitPSwmPsiGhiXlSrw

“WHY are lumber prices just out of control? “
Construction wood prices just keep going up. I asked an industry expert to explain, here is what she had to say.
Keta Kosman, Editor Madison’s Lumber Reporter
YouTube Channel – https://www.youtube.com/channel/UCIxR…​
Website – https://madisonsreport.com/​

April 9, 2021 — Shock and disbelief resonated throughout the North American forest products industry as solid wood construction framing building material prices surpassed expectations and just kept going up. It is a frustrating situation for sawmills as supply remains well below extremely hot, indeed unabated, demand. If anything, it looks like the home building and renovating season this year will be busier even than last year.

While there are builders and contractors who are cancelling and delaying jobs, this reversal is doing nothing to slow housing activity. The March housing starts data comes out at the end of this week and all expectations are that this will be up from the previous month and previous year.
By all accounts sawmill order files are now well into May, while panel (plywood and OSB) mills are currently quoting into August. This is beyond unprecedented. Lumber market players don’t know how to react as an impossible situation gets more impossible with every passing day.

Prices and demand showed a distinct upward trajectory as players settled back in after the Easter holiday weekend.”

— Madison’s Lumber Reporter

According to sellers, sales of Western S-P-F in the United States ramped up for the week ending April 9. Prices advanced again amid persistently scarce supply, with buyers at all levels desperate to secure any stick of wood they could get their hands on. Particularly challenging to source was low-grade, as were studs. Positive movement in lumber futures that week also generated a spate of activity from even the most circumspect of buyers, who realized the appearance of a flattening market over the past two weeks may have been a mirage
Western S-P-F producers in Canada boosted their prices with such frequency that week that Madison’s was contacted multiple times by sources with the latest, up-to-the-minute numbers. If post-Easter activity is the lumber market litmus test so many players claim, all indications are that the undersupplied, underbought, and exorbitantly-priced trajectory is here to stay – through the spring building season at least. Not only did #2&Btr 2×4 R/L soar another +$70 to US$1,130 mfbm while #3/Utility 2×4 reached $1000, sawmills were apparently sold out at those mind-blowing prices almost immediately. Reported order files were pushing into the second week of May.

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

After reaching the seemingly unbelievable level of US$1,060, in the week ending April 9, 2021, the wholesaler price of benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr was US$1,130 mfbm. This is up by +$70, or +6%, from the previous week.
That week’s price is up by +$90, or +9%, from one month ago when it was $1,040.

Traders of Kiln-Dried Doug-fir commodities couldn’t quite believe their eyes as the market they thought they saw topping out in recent weeks took another lunge forward. Prices were up between $35 to $55 on everything from #2&Btr to low grade to studs. Sawmills pushed their already-burgeoning order files into the last week of April at least, with some as far out as mid-May. Supply was crazy tight no matter the source.”

— Madison’s Lumber Reporter

Compared to the price one-year-ago, when it wasUS$310 mfbm, that week’s price is up by +$820, or +265%.
Compared to two years’ ago when it was $348, that week’s price is up by +$782, or +225%.

Compared to March 2020 total residential starts in the US last month shot up by +37% to a 1.74 million annualized rate, from 1.27 in the same month one year ago. Permits for future homebuilding increased spectacularly compared to one year ago, up by +30% to a rate of 1.77 million units last month compared to March 2020 when it was 1.36 million.

March starts of single-family housing, the largest share of the market and construction method which uses the most wood, flew up by +37% compared to March 2020, at 1.24 million.
Single-family permits were at 1.2 million, a significant jump of +36% compared to the same month last year.

As for lumber prices, after reaching the seemingly unbelievable level of US$1,130, in the week ending April 9, 2021, the wholesaler price of benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr was US$1,210 mfbm for the week ending April 16. This is up by +$80, or +6%, from the previous week. That week’s price is up by +$93, or +9%, from one month ago when it was $1,040.

US Housing Total and 1-Unit Starts March & Benchmark Softwood Lumber Prices April 2021

This year started off with a very harsh winter, which kept construction and building activity down in January and February. March housing starts across North America show a significant rebound; something Madison’s expected, due to a big jump in permits in the January data. Usually it takes two months for new housing authorizations to actually break ground, so these increases in March housing starts should be no surprise.

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.

Compared to March 2020 total residential starts in the US last month shot up by +37% to a 1.74 million annualized rate, from 1.27 in the same month one year ago. Surpassing even the sharp rises in February, permits for future homebuilding increased spectacularly compared to one year ago, up by +30% to a rate of 1.77 million units last month compared to March 2020 when it was 1.36 million.
March starts of single-family housing, the largest share of the market and construction method which uses the most wood, flew up by +37% compared to March 2020, at 1.24 million. Once again providing good indication for an increase in near-term future home building, single-family permits, meanwhile, were at 1.2 million, a significant jump of +36% compared to the same month last year.

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

As for lumber prices, after reaching the seemingly unbelievable level of US$1,060, in the week ending April 2, 2021, the wholesaler price of benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr was US$1,130 mfbm for the week ending April 9. This is up by +$70, or +6%, from the previous week.
That week’s price is up by +$90, or +9%, from one month ago when it was $1,040.

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

Compared to the price one-year-ago, when it was US$310 mfbm, the benchmark lumber price for the week ending April 9 is up by +$820, or +265%.
Compared to two years’ ago when it was $348, that week’s price is up by +$782, or +225%.

US Housing 1-Unit Starts & Permits March and Benchmark Softwood Lumber Prices April 2021

STAY AHEAD of US housing 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.