Madison's Lumber Reporter
The Source for Canadian and U.S. Construction Framing Softwood Lumber and Panel Prices
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For June 2021, total residential starts in the US increased by +49% from the same month one year ago, when it was 840,000. After spectacular increases so far this year, permits for future homebuilding in June were up by +35%, to a rate of fell 5.1% to a rate of 1.6 million units, compared to June 2020 when it was 891,000.
June starts of single-family housing, the largest share of the market and construction method which uses the most wood, was 1.16 million annualized, a +23% improvement compared to June 2020, when it was 891,000. Slowing down from the previous month but improving markedly over one-year-ago, single-family permits were at 1.1 million units, a +32% improvement compared to June 2020 when it was 840,000 units.
Shrewd investors know that construction framing softwood lumber prices are a good leading indicator for US housing activity, including home building and home sales. Don’t miss out, get lumber price data updates directly to your desktop every Friday morning.
As for the lumber market, following a brief lull at a level US$760 mfbm for two weeks, in the week ending July 16, 2021 the wholesaler price of benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr dropped significantly.
That week’s price of US$555 mfbm is down by -$205, or -27%, from the previous week, and is down by -$651, or -54%, from one month ago when it was $1,206.
When compared to the same week last year, when it was $554, that week’s price is up by +$1, or (0%).
STAY AHEAD of US housing price data by getting access to softwood lumber prices. Released every Friday for that week, since 1952 Madison’s Lumber Prices is used by the forest products industry as a price guide for North American construction framing dimension softwood lumber. These are, of course, the inputs into US and Canadian home building materials.
Madison’s Lumber Prices, weekly, are a good forecast indicator of US home builder’s current lumber buying activity ——> DETAILS
The latest data from the Western Wood Products Association shows that Canadian and US softwood lumber production and sawmill capacity utilization rates for April continued gains seen in March.
US sawmill production as a per cent of practical capacity for the first four months of this year improved to 88%, compared to the same time in 2020 when it was 83%, said the Western Wood Products Association’s monthly Lumber Track.
Bouncing back closer to normal historical levels, Canadian sawmill production as a per cent of practical capacity rose yet more in January to April 2021, to 84% compared to one year ago when it was a tragic 72%.
Back in May 2021 when lumber prices reached an all-time-ever historical high, and stayed there for a few weeks, customers held off buying in hopes that prices would go down. Now that, eventually, they have done so, there is a not insignificant amount of pent-up demand. At the producers, the goal has been to plump up order files.
Sawmills have been willing to entertain steep counter-offers and sell at lower prices, in order to increase sales volumes and push production out by a few weeks.
“Shaky demand dominated this post-holiday week; many thought a price bottom was close.”
— Madison’s Lumber Reporter
Demand for Western S-P-F lumber was quiet in the US to start the week ending July 8, but demand ramped up as players came back en masse after their July 4th holidays. Prices continued to vary wildly between suppliers at both the primary and secondary levels, and sawmills were more than amenable to counter offers.
Canadian Western S-P-F lumber producers apparently sold decent volumes for the week ending July 8, especially from midweek-on as US customers got back to their desks following the Independence Day holiday weekend. Both primary and secondary suppliers reported steady demand as buyers were in the driver’s seat, throwing out counter offers and shopping around for the best combination of price and shipment terms.
After experiencing huge drops over several weeks, for the week ending July 8, 2021 the wholesaler price of benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr stayed flat, at US$760 mfbm.
That week’s price is down by -$446, or -37%, from one month ago when it was $1,206.
“Green Douglas fir purveyors’ confidence grew that a price bottom was in sight for the market. Demand remained pokey as many buyers continued to watch and wait.”
— Madison’s Lumber Reporter
Showing more improvement after the gains in March, for January to April 2021 softwood lumber production in the US again gained, up by +4.5% from the first four months of 2020, says the latest issue of the Western Wood Products Association’s monthly Lumber Track.
US lumber production volumes were 12,593 mmfbm compared to the first four months of 2020 when it was 12,048 mmfbm. Looking at the month of April against March 2021, US softwood lumber production was 3,355 mmfbm in April 2021 compared to 3,331 mmfbm in March 2021.
Last month’s update here: https://madisonsreport.com/2021/06/08/north-america-softwood-lumber-production-sawmill-capacity-utilization-wwpa-mar-2021/
MADISON’S LUMBER REPORTER
After extended terrible drops for the past year, softwood lumber production in Canada rebounded spectacularly in January to April 2021, up +16%, to 8,450 mmfbm, compared to the first four months of last year when it was 7,295 mmfbm.
Specifically in British Columbia — which accounts for 50% of Canadian lumber manufacturing and sales — sawmill production volumes for January to April 2021 once again jumped by +25%, to 3,355 mmfbm, compared to the same time last year when it was 2,689 mmfbm.
US sawmill production as a per cent of practical capacity for the first four months of this year improved to 88%, compared to the same time in 2020 when it was 83%, said the Western Wood Products Association’s monthly Lumber Track.
Bouncing back closer to normal historical levels, Canadian sawmill production as a per cent of practical capacity rose yet more in January to April 2021, to 84% compared to one year ago when it was a tragic 72%.
For some rail traffic categories, percentage changes for the current week compared with the same week in 2020 are inflated due to the widespread shutdowns — and subsequent large reduction in rail volumes — that impacted many economic sectors last year at this time.
US railroads originated 1,386,745 carloads and intermodal units in June 2021, up +11% from the same week last year.
Total US combined rail traffic for the first six months of 2021 was 13,334,592 carloads and intermodal units, up +14% from the same period last year.
Regarding North American rail volume for the first 26 weeks of 2021, Canadian railroads reported cumulative volume of 3,921,754 carloads, containers, and trailers, up +9% from the same week one year ago.
After dropping a total of -52.5% from the all-time record high of US$1,600 mfbm — which had held for several weeks — this week the wholesaler price of benchmark construction framing dimension softwood lumber item Western Spruce-Pine-Fir KD 2×4 #2&Btr, for the week ending July 9, 2021, was again US$760 mfbm (net FOB sawmill) as it had been the previous week.
The full Madison’s Lumber Reporter North America softwood lumber price list of 450 individual lumber and panel commodity items is updated first thing Friday mornings Eastern time.
Lumber prices wavered slightly before falling dramatically in the past two weeks. Now that price quotes are approaching something reasonably close to what sticker-shocked customers might want to pay, sales volumes are improving. Have suppliers and buyers found the sweet spot where lumber prices will settle until the weather turns winter-like and construction stops for the year?
We won’t know until after the dual Canada Day / Independence Day long weekend at the beginning of July.
Read More (and see the graphs and table): https://madisonsreport.com/lumber-prices/
Madison’s Products: https://madisonsreport.com/products/
Prices reflect week of June 17, 2021 (CLICK TABLE TO ENLARGE)
U.S. Census Bureau and the Department of Housing and Urban Development data released this week of new house prices shows new homes for sale are experiencing the same supply squeeze as lumber has been. The median sales price of a new home in the US rose to a record US$374,400 in May. About 76% of homes sold last month were either under construction or yet to be built. This is a phenomenal ratio.
Sales of new US single-family homes fell to a one-year low in May as the median price of newly built houses soared amid expensive raw materials, including framing lumber. New home sales comprise 10% of the housing market and are considered a leading housing market indicator as they are recorded when contracts are signed. There were 330,000 new homes on the market last month, up from 315,000 in April. At May’s sales pace it would take 5.1 months to clear the supply of houses on the market, up from 4.6 months in April.
As for the lumber market, After staying flat over the Canadian Victoria Day long weekend and US Memorial Day holiday, lumber prices wavered slightly before falling dramatically in the past two weeks. Now that price quotes are approaching something reasonably close to what sticker-shocked customers might want to pay, sales volumes are improving. Have suppliers and buyers found the sweet spot where lumber prices will settle until the weather turns winter-like and construction stops for the year? We won’t know until after the dual Canada Day / Independence Day long weekend at the beginning of July.
Compared to the price one-year-ago, when it was US$394 mfbm, for the week ending June 17, 2021, the price of Western S-P-F KD 2×4 was up by +$654, or +166%.
https://madisonsreport.com/
Western S-P-F sawmills in the US had little to no order file to speak of as buyers continued to wait and watch for the most part. There was still a steady stream of takeaway as many buyers found their preferred price and jumped in – largely dependent on the state of their individual inventories – and price reports varied wildly due to the sheer number of counter-offers being entertained by different producers. A large contingent of customers continued to lean on whatever inventory they had on the ground as they waited to pounce at the elusive bottom to buy.
Canadian Western S-P-F producers continued their struggle to find takeaway of serious volumes as buyers smelled blood and were often content to wait and see how deep corrections would go before stepping in to close purchases. Demand was still there, but was accompanied by considerable counter-offers on top of – or, more appropriately, below – asking prices from sawmills. Levels were all over the place as some producers tried to hold the line while others slashed their numbers with aplomb to entice buyers.
Builder backlogs of projects awaiting construction remain elevated and indicate residential building will stay firm in coming months and contribute to economic growth.
STAY AHEAD of US home sales data by getting access to softwood lumber prices. Released every Friday for that week, since 1952 Madison’s Lumber Prices are used by the forest products industry as a price guide for North American construction framing dimension softwood lumber. These are, of course, the inputs into US and Canadian home building materials.
