Current Softwood Lumber Prices Compared to Recent and Historical Highs: Sept 10, 2018

Following the Labour Day long weekend in Canada and the US, forest industry professionals came back to their desks this week to lumber prices further stabilized over the massive volatility of earlier this year. Very robust US new home building and remodelling — that most had not predicted last year — continues to drive unrelenting demand for construction framing lumber.

Customers, however, know that sawmills have been producing in high gear for this whole year, so are easily put off by more price increases. Much haggling is going on, with counter-offers, and counter-counter-offers, being bandied about among producers and customers. Many phone calls are made but few orders are booked as buyers call around trying to chip seller prices down as much as they can.

Elsewhere, yet another year of record-breaking wildfires across North America is causing serious concern about both near- and mid-term timber supply in the very important fibre basket of British Columbia.

For now forest operators are working down log supplies garnered earlier in the summer, before the fire ban came on. And are hoping for cold weather quickly so the roads will freeze and heavy equipment can once again start operating in the woods. It will be important for northwest North American sawmills to stock up on logs as much as they can before the end of this year.

SOURCE: Madison’s Lumber Reporter

Players are looking very carefully at the supply-demand balance, and expected continued strong demand from the US. This year there was no winter break in US home building: a lot of wood was sold right up to the end of the year, and lumber prices did not have their previously-usual seasonal drop in 4Q. While historically softwood lumber sales really pick up in early February, this year right away on January 2 people were ordering wood in large volumes.

The horrible supply chain and transportation problems at that time, especially on the Canadian railways, put a real supply crunch on wood. Secondary suppliers and end-users alike waited up to several MONTHS to receive lumber ordered at the beginning of the year. This made prices difficult to peg, as customers were forced to order intermediate wood at higher prices to replace the wood they had already ordered but was not close to arriving.

As Madison’s has been saying for most of this year, the price floor of benchmark WSPF KD 2×4 #2&Btr is likely to be US$500 mfbm into the near-term future. This week that prices is flat over last week, while futures are slowly catching up. On Friday softwood lumber futures on the September 15 contract were at US$439, it will be very interesting to see what that price will be next week Friday when the September contract closes.

Print this week on Western Spruce 2x4s is US$482 mfbm.

SOURCE: Madison’s Lumber Reporter