The spectacular rebound of North American construction framing dimension softwood lumber prices in the first week of February continued last week as prices rose yet further in response to transportation problems, mostly on the Canadian railways. Severe weather hit many parts of Canada and the US, causing delays of shipments from softwood lumber suppliers. Customers, already low on inventory as they had been waiting for prices to come down, were forced to buy specific items for immediate fill-in needs. Sawmills responded by raising prices and by going off-the-market on the most popular items, because they didn’t want to quote too far into the future in case prices rise more.
Wholesaler prices for benchmark lumber (net FOB sawmill) commodity Western Spruce-Pine-Fir KD 2×4 #2&Btr started this week at US$422 mfbm, an $18 or +4.5% increase from $404 the week before.
Sales volumes were a little lower last week but still quite good considering the polar vortex. — Madison’s Lumber Reporterwww.madisonsreport.com
This benchmark softwood lumber commodity price is now down $96, or -19%, from one year ago’s level of US$518 mfbm.
A respite from recent terrible weather, meanwhile, in several target markets helped to ratchet up demand while field inventories among customers remained lower than optimal if not outright depleted of some items. Wholesalers and distributors continued to clean out older inventory at prices lower than replacement levels, yet sawmills were frequently off market for 2×4 and 2×6 #2&Btr and #3/Utility only to come back at boosted asking prices. Rail service in the Western US began to be a problem for everyone from producers to buyers, as pockets of cold weather exacerbated slow and late cars.
This week’s price for the other large volume-traded softwood lumber commodity, Southern Yellow Pine KD 2×4 #2&Btr East Side was US$403 mfbm, a +5.2% or +20% increase from the previous week’s price of $383, and a -27%, or $115, decrease from the same week in 2018. Forest2Market’s composite southern yellow pine lumber price for the week ending February 1 was US$415 mfbm, a +6.7% increase from the previous week’s $378 but a -7.8% decrease from the same week in 2018.
Producers of Eastern Spruce-Pine-Fir dealt with a number of swirling factors including:
- pokey rail service;
- sporadic buying patterns;
- pockets of icy cold weather; and,
- yo-yoing lumber futures.
Eastern Canadian sawmills had production booked to mid- or late-February for the most part, while secondary suppliers often sold a little below replacement to snatch orders from hungry retailers with waning inventories.
Sales and construction activity slowed down markedly in the US Northeast thanks to a spate of serious winter weather. This week everyone was battening down the hatches in preparation for more frigid fronts in the forecast. A general lack of wood in the pipeline – as well as cross-country shipping problems – kept inventories low. — Madison’s Lumber Reporterwww.madisonsreport.com
Current Softwood Lumber Prices Compared to Recent and Historical Highs: Feb 2019
The below table is a comparison of June 2018 and February 2019 benchmark dimension softwood lumber 2×4 prices compared to historical highs of 2004/05: