Astonished Customers Delay Buying as Softwood Lumber Prices Remain High

Players in the recent overheated lumber market took a pause this week as benchmark WSPF KD 2×4 #2&Btr cash prices stayed flat over the previous week. The lumber futures board on the Chicago Mercantile Exchange dropped down-limit at close Thursday and continued it’s slide in active trading Friday.

Sawmills were able to respond to reluctant customers with steep counter-offers as those out- of-stock on specific items could no longer hold off buying.

Otherwise, customers struggled over every order in [probably vain — ED] hopes that prices might soon fall back a bit.

SOURCE: Madison’s Lumber Reporter

Already-warming woods in the north, especially out west, had lumber producers eyeing their log decks with trepidation. They will need access to the forest for timber to feed sales made, but the slush and ice-melt are already beckoning seasonal road bans.

Current Softwood Lumber Prices Compared to Recent and Historical Highs: March 2018

This table is a comparison of June 2017 and March 2018 prices for benchmark dimension softwood lumber 2×4 prices compared to historical highs of 2004/05:

SOURCE: Madison’s Lumber Reporter

The latest North America forest industry data, for full-year 2017, shows solid growth in Canadian and US lumber production, sales, and exports. An interesting new relationship is developing in the export market: savvy readers will notice a massive increase in US log export to China, and US lumber import and export with China.

This material is not for home building, but represents a wide variety of either finished or component products that might go into furniture, or counters/fixtures/mouldings, or otherwise finishing components.

For it’s part, Canadian lumber exports are also diversifying, specifically from the west coast to Asia. The most prized market here is, of course, Japan.

There is much rumbling among watchers of the industry about the increase of European softwood lumber imports into USA.

While of interest, this is currently from a very low base. Altogether the volumes of this activity amount to 1% of total US lumber consumption. So even at incredible growth rates, it would take a long time for this wood to have an impact on overall lumber prices in North America.