Weekly Softwood Lumber Blog

New home building and permits for the first five months of this year are up compared to January to May of 2021.

While month-over-month starts and permits are down in May compared to April, building and permits activity for the first five months of this year are up compared to January to May of 2021.

After dropping quite a bit in recent weeks, many softwood lumber prices levelled off in mid-June as a modicum of supply-demand balance seemed to have been reached.

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Over the past two years as the lumber market reacted to big changes in external conditions, there was never-before-seen high price levels and volatility.
It looks like the remarkable highs and attendant corrections down might be getting worked out, as these swings are less extreme each time.

After dropping quite a bit in recent weeks, many softwood lumber prices levelled off in mid-June as a modicum of supply-demand balance seemed to have been reached.
Over the past two years as the lumber market reacted to big changes in external conditions, there was never-before-seen high price levels and volatility.

It looks like the remarkable highs and attendant corrections down might be getting worked out, as these swings are less extreme each time. This is the usual time of year for construction framing dimension softwood lumber prices to be dropping, as most large-volume builders have received the wood they need for housing projects planned.
At the moment the delivery delays which have plagued the forest industry for more than six months seem to be working out; customers are receiving their orders in a more normal time frame.

Staying flat from the previous week, for the week ending June 10, 2022 the price of benchmark softwood lumber item Western Spruce-Pine-Fir 2×4 #2&Btr KD (RL) was again US$660 mfbm, said weekly forest products industry price guide newsletter Madison’s Lumber Reporter.
This is down by -$285, or -30% from one month ago when it was $945.

Persistently negative lumber futures led some players to re-quote upcoming projects to avoid heavy losses. Stud producers described limited sales activity, even after significant price drops in recent weeks.

Sales of panels were particularly rough as market malaise and price drops persisted across all commodity groups.”

— Madison’s Lumber Reporter

Producers of Western S-P-F lumber and studs in the United States searched fixedly for firm offers. Buyers were largely idle, though an undercurrent of demand was evident among those suppliers who were more open to counteroffers. Sawmill order files were no further than two weeks out, as producers showed more prompt material with each passing day.

Western S-P-F lumber prices in Canada continued to vary significantly between print levels, producer asking prices, and actual sales numbers. The overall sentiment was the same as the previous week: profoundly uncertain. Print levels were flat or down a few points while all manner of below-print counteroffers and other deals were happening behind the scenes.
Primary and secondary suppliers crossed their fingers in hopes of the market putting in a bottom sooner than later, while buyers held off as best they could in order to cash in at the nadir. Meanwhile, most deliveries were finally occurring within quoted shipping timelines as subpar sales volumes over the past month or so has eased up that ongoing snarl in transportation.

Stud Western S-P-F prices corrected again as mills tried to find a trading range that would coax buyers off the fence. Smatterings of business were reported, but most customers continued to sit on the sidelines in hopes of scooping the bottom when it hits.
Secondary suppliers remained busier than stud mills as buyers grabbed the odd fill-in LTL or mixed truckload from the distribution network. Order files marched ever-closer, with prompt offerings more common by the day. ”

— Madison’s Lumber Reporter

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

When compared to the same week last year, when it was US$1,275 mfbm, for the week ending June 10, 2022 price of Western Spruce-Pine-Fir 2×4 was down by -$615, or -48%.
Compared to two years’ ago when it was $378, this week’s price is up by +$282, or +75%.

While month-over-month starts and permits are down in May compared to April, building and permits activity for the first five months of this year are up compared to January to May of 2021.

After dropping quite a bit in recent weeks, many softwood lumber prices levelled off in mid-June as a modicum of supply-demand balance seemed to have been reached. Over the past two years as the lumber market reacted to big changes in external conditions, there was never-before-seen high price levels and volatility.
It looks like the remarkable highs and attendant corrections down might be getting worked out, as these swings are less extreme each time.

Benchmark Softwood Lumber Prices May & US Housing Starts June: 2022

This is the usual time of year for construction framing dimension softwood lumber prices to be dropping, as most large-volume builders have received the wood they need for housing projects planned. At the moment the delivery delays which have plagued the forest industry for more than six months seem to be working out; customers are receiving their orders in a more normal time frame.

* Madison’s Lumber Prices, weekly, are a good forecast indicator of US home builder’s current lumber buying activity ——> DETAILS

Total housing starts in the US for May 2022 fell -14.4% to 1.549 million compared to April, but are only -3.5% below the May 2021 rate of 1.605 million. Data for April was revised higher to a rate of 1.810 million units from the previously reported 1.724 million units. Total starts year-to-date are up +8.2% compared to the first five months of 2021.

Meanwhile, building permits fell by -7% to 1.695 million from the revised April rate of 1.823 million. This is +0.2% above the May 2021 rate of 1.691 million. During the first five months of the year 739,300 permits were issued, a +2.7% increase from the same period in 2021. 

Madison’s Benchmark Top-Six Softwood Lumber and Panel Prices: Historical Perspective

The backlog of houses approved for construction that are yet to be started continued to break all-time record levels. Indeed, the number of houses approved for construction that are yet to be started increased +0.7% to 283,000 units. The single-family housing backlog was unchanged at 152,000.

Combined, there are a record 1.665 million units under construction, 822,000 of them single-family homes. This above the previous record of 1.628 million units that were under construction in 1973. These will eventually become starts and help to underpin residential construction.

STAY AHEAD of US housing 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.

March starts of single-family housing, the largest share of the market and construction method which uses the most wood, tumbled -9.2% to a rate of 1.051 million units in May. Building permits are generally submitted two months before the home building is begun, so this data is as indicator of July construction activity.
After showing big jumps year-over-year for most of the past year, May 2022 single‐family authorizations were at a rate of 1.048 million, which is -5.5% below the revised April figure of 1.109 million.

The <housing> market has now passed an inflection point whereby single-family home building is weakening. We expect further declines in the months ahead, which itself is a recession warning for the quarters ahead.”

— Robert Dietz, chief economist for NAHB

Benchmark Softwood Lumber Commodity Western Spruce-Pine-Fir Price: June 2022

Looking at lumber prices, staying flat from the previous week, for the week ending June 10, 2022 the price of benchmark softwood lumber item Western Spruce-Pine-Fir 2×4 #2&Btr KD (RL) was again US$660 mfbm, said forest products industry price guide newsletter Madison’s Lumber Reporter. This is down by -$285, or -30% from one month ago when it was $945.

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.

US Housing 1-Unit Starts & Permits May & Benchmark Softwood Lumber Prices June: 2022

Housing construction appears to be undergoing a transition, with the sector caught between sharply rising mortgage rates and declining affordability on the one hand and supply-chain constraints on the other that continue to result in rising backlogs of projects.”

— Conrad DeQuadros, senior economic advisor at Brean Capital in New York

When compared to the same week last year, when it was US$1,275 mfbm, for the week ending June 10, 2022 price of Western Spruce-Pine-Fir 2×4 was down by -$615, or -48%. Compared to two years’ ago when it was $378, this week’s price is up by +$282, or +75%.

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As usual for this time of year, most large home builders and construction companies have received the wood needed for their projects, and lumber prices start dropping.
It was this week last year when lumber prices reached previously never-imaginable highs and stayed that way for a few weeks before tumbling way back down, to the lows of 2019.

Recent transportation constraints eased somewhat, as delivery delays moved from more than one month to two weeks. Supplies improved, causing stiff competition between sellers for limited orders on-offer.
After big drops of a few week lumber prices started levelling out, for the week ending June 3, 2022 the price of benchmark softwood lumber item Western Spruce-Pine-Fir 2×4 #2&Btr KD (RL) was US$660 mfbm, down -$40, or -6%, from the previous week when it was $700, said weekly forest products industry price guide newsletter Madison’s Lumber Reporter.
This is down by -$285, or -30% from one month ago when it was $945.

Sawmills kept lowering their asking prices, however drops were decidedly less dramatic than the previous week.

North American lumber sales experienced another sloppy round of indeterminate price drops, anemic demand, and oversupply.”

— Madison’s Lumber Reporter

Traders of Western S-P-F commodities in the United States described a market that was more lethargic than usual for the time of year, even for a holiday-shortened week. Prompt availability was prevalent in some cases, but many suppliers reported shipping delays of two weeks.

June began not with a bang but with a whimper, so primary and secondary suppliers of Western S-P-F  in Canada continued their attempt to attenuate oversupplied positions. Buyers were firmly in the driver’s seat thus competition for limited orders was heated. Prices persistently peeled back as producers pursued apathetic purchasers.
Players didn’t expect much more downside to the market moving forward, but the last two years have taught them to be ready for anything.

Producers of Southern Yellow Pine dimensional lumber felt – read: hoped – they were close to the bottom of this current price slump. Asking prices continued to fall but the drops were notably less significant with each passing day. Buyers were mum again, sitting on their hands with an expectation that prices will keep declining.
Order files were into the weeks of June 13th or June 20th, sawmill- and item-dependent.”

— Madison’s Lumber Reporter

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

When compared to the same week last year, when it was US$1,600 mfbm, for the week ending June 3, 2022 price of Western Spruce-Pine-Fir 2×4 was down by -$940, or -59%. Compared to two years’ ago when it was $378, this week’s price is up by +$282, or +75%.

After severe drops in mid-2021 and again at the end of last year, Canadian sawmill capacity utilization rates continued recovering in March 2022.

US sawmill production as a per cent of practical capacity for March 2022 dropped to 83%, compared to the same month last year when it was 85%, said the Western Wood Products Association’s monthly Lumber Track. wwpa.org/reports

Still recovering from huge drops last year, Canada’s sawmill capacity utilization rate for March was only 76% compared to March 2021 when it was a low 85%.

A normal drop in orders for this time of year lead to sharp decreases in lumber prices. Recent sawmill curtailments — due to severe delivery delays and ongoing logistics problems — notwithstanding, lumber supply and inventories in the field increased to more healthy levels.

Thus customers were in a better negotiating position than the past few months, and responded with steep counter-offers to get sawmill prices significantly lowered. Normally by this season the large home builders and construction companies have received the wood they ordered in February to April, so lumber prices naturally start to soften.
Of course, the past couple of years have not been normal.
In addition, realtors and builders are noting that the seasonality we have all been used to over recent decades seems to be fading away, and that home buying and construction can be active at any time of year. Only the future will tell how this situation will unfold going forward.

Check back with the Madison’s website often for the latest softwood lumber prices and market updates.

Continuing the big drop from the previous week, for the week ending May 27, 2022 the price of benchmark softwood lumber item Western Spruce-Pine-Fir 2×4 #2&Btr KD (RL) was US$700 mfbm, down -$201, or -22%, from $901, said weekly forest products industry price guide newsletter Madison’s Lumber Reporter.
This is down by -$201, or -22% from one month ago when it was $1,086.

Players reported tangible improvement in delivery times thanks to the slower sales pace in recent weeks.

Prices of most solid wood commodities tumbled significantly as the market experienced an ongoing lull in buying.”

— Madison’s Lumber Reporter

Sales of Western S-P-F in the United States got even more languid due to the successive holiday-shortened weeks on either side of the border which dampened demand further. Producers found limited success enticing buyers, even with triple-digit price drops. Field inventories may have been severely strapped during a period of burgeoning construction across the country, but customers somehow remained stingy and avoided taking any long positions.
Secondary suppliers were busier; even if their price levels were above sawmill-replacement, they could get material to buyers more quickly.

Confusion and uncertainty of Western S-P-F products reigned again for Canadian players. Buyers were largely convinced their strategy of holding off to force prices down was working. However producer costs continued to march upward, and region-specific fuel surcharges added a layer of frustration. 

It was another rough week for plywood and Oriented Strand Board traders in Eastern Canada. Pervasive downside in lumber continued to percolate into panels. Buyers remained apprehensive, confused, and cautious thanks to persistently dismal economic indicators.
Anemic demand for Western S-P-F sheet goods was reported again as secondary suppliers continued to compete tooth and nail for limited orders. Considerable discounts were common for promptly-available Super-B loads into the Vancouver, BC, region. Price levels were all over the place, and contingent upon origin, destination, and thickness. ”

— Madison’s Lumber Reporter

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

When compared to the same week last year, when it was US$1,640 mfbm, for the week ending May 27, 2022 price of Western Spruce-Pine-Fir 2×4 was down by -$940, or -57%. Compared to two years’ ago when it was $387, this week’s price is up by +$322, or +85%.

At this time last year lumber prices started their skyrocket to absolutely unprecedented highs, where they stayed for a few weeks then fell way back down to the lows of 2019. 

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This year those wild swings seem to be getting worked out, with lower highs and higher lows, so it is likely industry has found where the “new normal” is, thus where pricing levels are going to be. This year prices are topping-out lower, and are bottoming-out higher. 

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As industry and customers are realizing the “new normal” price levels in this post-Covid19 world, it seems that the incredible volatility of the past two years is behind us. In the past, this would be the time of year that lumber prices start to soften, as the major home builders and retailers would have made their largest-volume purchases for the coming building season.

Whether that previously “normal” seasonality will come into play this year remains to be seen. Regardless, it is generally acknowledged that those extreme highs of last year will probably not return, and customers can expect more regular price swings going forward.

As recent supply-demand imbalance worked out, and for the usual time of year when buying slows, prices of most softwood lumber and panel commodities dropped significantly in the third week of May.
Interestingly, this correlates almost exactly to where prices were at the end of June last year … both in trendline at actual price levels.

Indeed, for the week of July 5, 2021, the price of benchmark lumber item Western S-P-F 2×4 was in the middle of a big drop downward from previously unimaginable highs, at US$760 mfbm, compared to US$700 toward the end of May this year. While lumber prices might fall still a little bit more during June, they are not expected to reach the lowest point of last year; when they were US$390 mfbm during September, then immediately started rising again.

Most industry folks agree that the extreme volatility of spring 2020 to late winter this year should be worked out, and — while prices could still fluctuate quite a bit — levels are stabilizing. So those highest-highs and lowest-lows of the past two years should be behind us, as the “new normal” is becoming recognizable.

Check back with the Madison’s website often for the latest softwood lumber prices and market updates.

Sliding significantly from the previous week, for the week ending May 20, 2022 the price of benchmark softwood lumber item Western Spruce-Pine-Fir 2×4 #2&Btr KD (RL) was US$901 mfbm, down -$169, or -16%, from the previous week when it was $1,070, said weekly forest products industry price guide newsletter Madison’s Lumber Reporter. That week’s price is down by -$185, or -17% from one month ago when it was $1,086.

Sawmills marched closer to their static order files, which were into the last week of May or first week of June depending on item and source.

Prices corrected on nearly all solid wood commodities this week as tumbling economic indicators shattered confidence indices.”

— Madison’s Lumber Reporter

As spring building season should be ramping up into full swing, a tentative sense of worry permeated the lumber market. Lumber buyers in the United States showed virtually no urgency, only purchasing from those from suppliers who could guarantee quick shipment.

Downward pressure late the previous week in Western S-P-F lumber rolled resoundingly into according to Canadian suppliers. The market as a whole had a benighted feel to it. Asking prices varied considerably between producers in Western Canada as large national sawmills and smaller regional facilities jockeyed for limited orders with aggressive numbers depending on the item, source, and destination.
Secondary suppliers remained busy furnishing the most desperate buyers with non-discounted, quicker-shipping transactions.

Purveyors of Western S-P-F studs in Western Canada described a softening market, with prices correcting and many purchasers retreating to the sidelines in hopes of buying the bottom.
Scattered sales activity persisted from customers looking to cover immediate needs, but supply appeared to be firmly ahead of demand. Sawmills order files remained into early- or mid-June.”

— Madison’s Lumber Reporter

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

When compared to the same week last year, when it was US$1,640 mfbm, that week’s price is down by -$739, or -45%. Compared to two years’ ago when it was $372, that week’s price is up by +$529, or +142%.