Just unbelievable for this time of year and if someone had predicted it a month ago they would have been met with derisive laughter, but lumber prices were actually up last week as demand increased. This is absolutely unprecedented for the week before US Thanksgiving and sawmills simply do not have enough wood in their yards to sell to ravenous customers.
As one large-scale lumber trader put it at the beginning of this week, “Customers who were reluctant to book orders at these new higher prices, when they called back that wood was already sold.”
Construction framing dimension softwood lumber is selling as if it is April, when the US home building season is getting started, not the end of November when construction and thus forestry are normally closing down for the year. Both the Case-Shiller house price index and the Federal Housing Finance Agency House Price Index came out Tuesday and are showing +7% and +8% increases respectively compared to last year.
Folks in the business of manufacturing and selling lumber alike actually don’t know what to think about this remarkable situation, but one thing is for sure: 2021 is going to be a hot banana for US home building and thus for lumber sales and prices.
“As another round of COVID-19 lockdowns loomed lumber demand remained unseasonably strong.” — Madison’s Lumber Reporter
Western S-P-F suppliers in the United States had another solid week of sales, with sawmills extending their order files on bread and butter items to the end of November. Prices advanced in fits and starts on certain commodities while most remained flat. However the strong tone of demand was inarguable. Demand for 2×4- and 2×6-9’s was again the hottest as multi-family projects continued to generate strong demand for that trim. Even as sales of #4/Economy lagged behind the rest of dimension items, prompt availability of even that weaker category was drying up with alacrity as demand strengthened further.
Sales of Western S-P-F in Canada developed a steady rhythm since last Wednesday according to producers. Three- to four-week order files at sawmills were established with ease on the most commonly-traded commodities, while some low grade items showed prompt availability. Players didn’t expect that to last, especially as many producers were apparently in the process of shifting their low grade focus over the winter to heavy export programs involving Asian countries.
Lower grade offerings were also getting cleaned up by Canadian buyers looking to take advantage of the “Canadian discount” before an expected change to the softwood lumber duty rate, which occurs soon.
To the astonishment of all, for the week ending November 20, 2020 the price of benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr continued to increase, climbing another +$6, or +1%, over the previous week to US$596 mfbm, said Madison’s Lumber Reporter. Last week’s price is -$104, or -15%, less than it was one month ago. Compared to one year ago, this price is up +$200, or +51%.
“Eastern S-P-F sales were robust last week as undersupplied buyers dipped in to the market frequently to shore up their perpetually-low inventories. Prices at sawmills continued to increase, with nine-foot studs gaining significant ground in the Great Lakes market. Material availability was a persistent problem as both primary and secondary suppliers couldn’t keep up with sustained demand. Sawmill order files began to build, with most items booked into the week of November 30th.” — Madison’s Lumber Reporter
Compared to the 1-year rolling average price of US$538 mfbm, last week Western S-P-F KD 2×4 #2&Btr was selling for +$58, or +11% more, and was up +$143, or +32%, compared to the 2-year rolling average price of US$453 mfbm.