October 17, 2014
MADISON’S WEEKLY LUMBER MARKET UPDATE AND OVERVIEW
Provided by: Madison’s Lumber Reporter
www.madisonsreport.com
After a rocky September demonstrating significant fluctuation, North American dimension lumber and panel prices stabilized this week to come almost exactly even with one-year ago levels, according to weekly building materials price newsletter Madison’s Lumber Reporter. Positive US housing starts numbers, released Friday, could be enough to offset unease about the state of the US economy in general.
Traders of solid wood products in the US and Canada expressed negative sentiment this week, as there had been some expectation of stronger sales volumes for autumn so far. Regardless, 2014 has been signified by real stability over last year; both with shipments and prices. Lumber futures on the Chicago Mercantile Exchange continue to trade at a significant discount to cash (see details below).
Standard construction framing lumber products, as well as specialty items like studs and Douglas fir green, maintained price levels over the previous week. The only anomaly was Southern Yellow Pine KD 2×4 on the east side, which gained a full $10, or 2.3 per cent, to end the week at US$430 mfbm. This is a $25, or 5.5 per cent, drop from US$455 of one month ago, but exactly level to the same time last year.
In terms of sales volumes, Western Spruce-Pine-Fir 2×4 is the benchmark dimension. However, for most of this year southern pine has lead the market to some degree, providing a forward indication of what prices of other species and commodities might do the following week.
In keeping with the past couple of years, wholesalers and secondary suppliers stocked up on wood for immediate needs only. Inventories in the field remain extremely weak, with players buying smaller volumes more frequently than was the traditional practice prior to the collapse of US home building in 2006.
In company news this week, Vancouver, BC’s, Interfor and Ilim Timber, based in Germany and Russia, announced Thursday they have reached an agreement under which Interfor will market Ilim Timber’s European lumber products in North America. The first shipment of European spruce and red pine will arrive on the eastern seaboard of the US in the second half of October. The sales agreement builds on the relationship between Interfor and Ilim Timber and follows Interfor’s acquisition earlier this year of two sawmills in the US South from a subsidiary of Ilim Timber.
As well, Georgia-Pacific, out of Atlanta, GA, announced plans also Thursday to invest US$37 million in its lumber plant in Gurdon, AR, to expand the production capacity of the sawmill by about 60 per cent. The improvements include the installation of a new continuous dry kiln and a planer mill, in addition to infrastructure improvements. The project is expected to be complete by 3Q 2015. Georgia-Pacific said it is also evaluating about a US20 million investment into the Gurdon plywood mill to increase its efficiency and capacity, and reduce air emissions.
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LUMBER FUTURES COMMENT:
Lumber Futures closed lower for the week on mixed selling. Profit taking long liquidation and commercial hedge selling to lock in Basis lent overhead pressure. The market slowly slipped down early in the week on buying interests from mixed profit taking short covering into key technical support between the 100 week moving average of US$344.00 and the 200 day moving average of US$339.00. However Lumber fell prey to tumbling US financial markets on Wednesday and subsequently broke technical support through the end of the week.
The front November contract lost $8.10, or 2.4 per cent, closing at US$334.60 and the new lead January contract fell $15.90, or 4.7 per cent, to US$336.70.
Paul Court
Floor Broker, Vice President Forest Products
INTL FCStone
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