Weekly Softwood Lumber Blog

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 June 11, 2020, dropped dramatically to US$1,275 mfbm (net FOB sawmill), down by -$325, or a full -26%, from last week when it was US$1,600 mfbm.

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After some waffling by suppliers, sharply decreased sales volumes, and strong push-back from customers, 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 June 11, 2020, dropped dramatically to US$1,275 mfbm (net FOB sawmill), down by -$325, or a full -26%, from last week when it was US$1,600. 
This week’s price is up +$45, or +4%, from one month ago when it was $1,230. 
And is up +$903, or +243%, from the same week in 2020 when it was $372.

https://eyeonhousing.org/2021/06/april-single-family-permit-gains-austin-2nd-largest-multifamily-market/

Here is a SNEAK PEAK at tomorrow’s print for North American construction framing softwood lumber and panel prices:

After some waffling by suppliers, sharply decreased sales volumes, and strong push-back from customers, 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 June 11, 2020, dropped dramatically to US$1,275 mfbm (net FOB sawmill), down by -$325, or a full -$26, from last week when it was US$1,600.
This week’s price is up +$45, or +4%, from one month ago when it was $1,230.
And is up +$903, or +243%, from the same week in 2020 when it was $372.
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.

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June 8, 2021 — As May rolled into June and following the dual long weekends of Victoria Day in Canada and Memorial Day in the US, lumber prices remained flat like they had been the previous week. However rumblings emerged which suggested prices might be going down soon.

The main indication of possible lower prices was order files at sawmills which were shrinking from approximately four weeks down to two weeks. Customers sensed a slight change in the supply-demand balance and thought it was worthwhile to wait before ordering more wood, in case prices actually did fall. As with the previous couple of weeks, sales volumes were quite small because only those who really needed a few sticks of specific commodities did make purchases.
There is word out of the British Columbia interior, which will be the same for the Pacific Northwest of the US, that the forests are “tinder dry”. Even if there are not wildfires, the fire ban will go into effect sooner rather than later. This prevents heavy equipment from going into the woods, and stops trucking in and out of the forest. At this moment the sawmills are loading up with logs as much as possible, in order to have the feedstock they will need to run lumber through the summer.

While demand took another step back, WSPF prices were flat to slightly up and many ESPF items corrected down marginally.”

— Madison’s Lumber Reporter

Western S-P-F purveyors in the US related a much slower week overall as players sick of the topsy-turvy lumber game absconded for an extended Memorial Day holiday weekend. Bread and butter prices nudged up by $10, but most dimension items remained flat from the previous week. Sawmills reported order files into the second week of June for dimension offerings and into the third week for studs. Much of the week’s sales activity occurred at secondary suppliers, as wholesalers and distributers often had lower prices and quicker shipment available.
Canadian Western S-P-F producers reported an undercurrent of good takeaway amid the overall pullback in demand. The buying frenzy of previous months was gone but sawmills did not expect prices to come off in any serious measure going forward. Demand for #2&Btr dimension and #3/Utility 2×4 R/L remained robust, while that for six inch #3 and for #4/Economy were softer, according to sellers. Log decks were still in good shape for the time being while rail car supply continued to be a struggle. 

Madison’s Benchmark Top-Six Softwood Lumber and Panel Prices: Monthly Averages

Prices remained flat on almost all items for the week ending May 27, 2021 as benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr wholesaler price remained at US$1,640 mfbm, once again.
That week’s price is up by +$23, or +1%, from one month ago when it was $1,618.

Eastern Canadian producers held their #2&Btr lumber prices flat or discounted between $10 and $55. According to traders, sawmills had trouble selling at lower numbers as buyers were extremely cautious after seeing this latest sales pause extend another week.”

— Madison’s Lumber Reporter

Compared to the price one-year-ago, when it was US$378 mfbm, for the week ending May 27, 2021, the price of Western S-P-F KD 2×4 was up by +$1,262, or +334%.

Finally recovering after some terrible lows over the past year, for March 2021 softwood lumber production volumes in the United States and Canada increased substantially. Sawmill capacity utilization rates in the United States were essentially flat, while that in Canada improved.

After struggling to rise from the lows of one-year-ago, compared to last month and compared to last year, for March 2021 softwood lumber production in the US rose dramatically, up by +17% from the February and up +10% from March 2020, says the latest issue of the Western Wood Products Association’s monthly Lumber Track.
US lumber production volumes for the first three months of 2021 were 9,201 mmfbm compared to one year ago when it was 9,142 mmfbm. This is an increase of +0.6%. Looking at the month of March against February 2021, US softwood lumber production was 3,301 mmfbm in March 2021 compared to 2,816 mmfbm in February 2021.
Last month’s update here: https://madisonsreport.com/2021/05/11/north-america-softwood-lumber-production-sawmill-capacity-utilization-wwpa-feb-2021/
Similarly, softwood lumber production in Canada rose substantially in March 2021, compared to both the previous month and the previous year. Manufacturing volumes increased by +21% in March 2021, to 2,351 mmfbm, compared to February when it was 1,940 mmfbm, and was up by +13 compared to March 2020 when it was 2,078 mmfbm. Specifically in British Columbia, sawmill production volumes for March 2021 continued gains made through this year so far, up by +25%, to 918 mmfbm, compared to February when it was 737 mmfbm.
For the first three months of this year, softwood lumber production in Canada jumped by +7.7%, to 6,294 mmfbm compared to 5,843 mmfbm in the first three months of 2020.

North America Softwood Lumber Production, Sawmill Capacity Utilization, WWPA: March 2021

US sawmill production as a per cent of practical capacity for the first three months of this year improved to 87%, compared to the same time in 2020 when it was 85%, said the Western Wood Products Association’s monthly Lumber Track.
Rebounding most encouragingly, Canadian sawmill production as a per cent of practical capacity rose yet more in the first three months of 2021, to 85% compared to one year ago when it was only 77%.

There will be new bottom lumber price and 15 years of very robust building …

FULL STORY: https://www.lesprom.com/en/news/There_will_be_new_bottom_lumber_price_and_15_years_of_very_robust_building_99039/

Last year in October, the price reached a high of around $1,000 mfbm. The previous high was around $550 in June of 2018, which lasted literally two weeks. In October and November 2020, we had the price up to almost $1,000 which lasted six weeks.
Then, as is usual in December, the price went down, which is normal for the end of the year. But in the first week of January this year it came back up higher.
The normal seasonal price increase is from around February to April, because the large builders and the retailers pre-order so they have their wood in May and June when building really starts. So normally around now the price is flat or goes lower. Unless there are wildfires, or storms, or labour issues.

— Madison’s lumber reporter

Before Covid we were worried there would be a recession. I can’t see how a recession would happen now. Inflation, yes. But if people go back to work, if there is a lot of employment and the pay is good, there will not be inflation. It will be a time of growth.
If that is the case, there will be a new bottom normal lumber price and 15 years of very robust building for this new demographic. There are huge amounts of people who are entering the age of being home buyers.

The RAC tracks 11 commodity groupings moved by freight railways in Canada.

A recent conversation about US railcar loadings got me thinking about similar data for Canada, thankfully the Railway Association of Canada recently released their 2019 report.

In 2019, intermodal goods, minerals, and fuels and chemicals were the largest groupings of carloads transported by Canada’s railways, accounting for 66 per cent of all carloads. The largest increases among groupings in 2019 were intermodal (48,900 carloads or 2.6%), coal (23,700 carloads or 7.0%) and fuels & chemicals (22,500 carloads or 3.6%).

The largest decreases were forest products (-35,300 carloads or -13.6%), minerals (-33,100 carloads or -3.1%), metals (-14,600 carloads or -8.1%) and paper products (-13,000 carloads or -9.2%).

In 2019, the freight rail sector’s revenue increased by 1.6 per cent to $12.6 billion. Similar to the previous year, freight railways generated most — 55 per cent in 2019 — of their revenue from transporting intermodal goods, agricultural products, and fuels and chemicals.

On a revenue basis, agriculture, coal, fuels & chemicals, food products, manufactured & miscellaneous and intermodal saw increases over 2018; while minerals, forest products, metals, machinery & automotive and paper products saw decreases.

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.

The Association of American Railroads (AAR) reported May 26 US and Canadian rail traffic volumes for the week of May 22, 2021.
US railroads originated 528,774 carloads and intermodal units for the week of May 22, up +23% from the same week last year and 286,547 containers and trailers, up +20%.

Total US combined rail traffic for the first 20 weeks of 2021 was 10,242,390 carloads and intermodal units, up +13% from the same period last year.

Regarding North American rail volume for the first 20 weeks of 2021, Canadian railroads reported cumulative volume of 3,035,544 carloads, containers, and trailers, up +8.5% from the same week one year ago.

Sales of new single-family houses in the US for April 2021 were at a seasonally adjusted annual rate of 863,000. This is down -6% from the revised March 2021 rate of 917,000 and again up an amazing +48% compared to the April 2020 rate, which was at a revised rate of 582,000.

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In the week ending May 14, 2021 the wholesaler price of benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr was US$1,650 mfbm. This is up by +$90, or +5%, from the previous week when it was $1,550.

At the current sales pace in April it would take 4.4 months to clear the supply of houses on the market, up from 3.6 months in March.

After dropping somewhat last month, the median sales price of new houses sold in April 2021 jumped significantly, to US$372,400, from $330,800 in March 2021.

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Demand and prices were largely flat this week as players tried to figure out whether this latest lull was another mirage or not.

WSPF producers in the US maintained order files at their sawmills into mid-June as multiple factors resulted in slower business and an evening out of prices.
Large retailers reported marginally lower sales volumes so far in May. WSPF commodity prices were flat across the board this week as scores of buyers sat on their hands. Many Canadian producers, wholesalers, buyers, and end users were gone by Wednesday for the May long weekend, adding to the sense of hesitation.

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