Sticker Shock Restrains Buying but Lumber Prices Remain High

Sticker Shock Restrains Buying but Lumber Prices Remain High

The recent huge burst of buying slacked off this week as lumber futures descended from their up-limit of last week to crash down-limit Monday and trigger a stop-order on the Chicago Mercantile Exchange.

In the cash market, customers — still reeling from sticker-shock last week — held off on buying unless absolutely desperate for fill-in needs. Gauging inventory on-hand was difficult as transportation woes, both on the rails and with trucks, were in no way improved over the weeks of very bad weather last year.

Producer yards were full of inventory already sold and order files at sawmills remained a very encouraging two to three weeks. After the stupendous soaring of the entire month of January, prices on standard construction framing materials remained level this week as fewer orders were booked.

Specialty items, however, like Douglas fir green, bounded up another $25 on last week’s gains. The biggest increase — once again — was with panel. Both plywood and OSB in the east launched another $25 or $30. These prices have been waffling terribly since mid-2017 as some operators adjust production volumes while others try to bring more capacity back online.

US home building and remodelling activity ended 2017 much better than even optimistic expectations the previous year, and momentum from very hot softwood lumber demand last year is absolutely carrying forward into 2018. However timber supply issues in most of the north and west of North America continues to provide troubling uncertainty for the stability of production volumes in several important Canadian and US sawmilling regions.

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