Lumber Prices Drop in Mid-August Lull

Prices of many standard construction framing dimension softwood lumber commodities dropped somewhat as the mid-August holiday season came on.

At this time of year it is normal for construction activity to slow down as folks take off for the last vacations before Labour Day long weekend and back-to-full-time-work for September. As well, the province of Quebec slowly returns from it’s annual two-week break, for both construction and for industrial manufacturing.

Historically, it is normal for mid-August to be a bit of a lull in lumber buying. Given the enormous volatility of the past three years, forest products industry players are quite curious to see how the price trend will play out as this summer eventually wanes. Business was divided between those buyers who sought short- to medium-

term coverage at what they deemed amenable numbers, and those who staunchly stood pat, hoping to outwait suppliers and swoop in at potentially lower levels.

In the week ending August 11, 2023, the price of benchmark softwood lumber item Western Spruce-Pine-Fir 2×4 #2&Btr KD (RL) was US$397 mfbm. This is down by -$29, or -13%, compared to the previous week when it was $426, said weekly forest products industry price guide newsletter Madison’s Lumber Reporter.

That week’s price is down by -$58, or -13%, from one month ago when it was $455.

Demand for lumber, studs, and panels was quieter as buyers took a step back to assess their positions, go on vacation, or simply sit on the sidelines and wait for prices to crack.
Madison’s Lumber Reporter

Western S-P-F lumber and studs’ traders in the United States weren’t too surprised by the continued waning of enthusiasm and falling of prices through early August so far.

While this summer lull wasn’t unexpected, nearly every market move preceding it so far this year has been. Thus players were extra cautious about relying too much on a highly-anticipated September surge in sales, which might not actually occur.

One experienced trader wondered whether that wait may be in vain, as sawmills conspicuously and consistently walked away from deeper counters. Time will tell.

This week started slowly for Canadian purveyors of Western S-P-F lumber as the country was off work for the civic holiday on Monday. Most buyers kept to the sidelines as the prevailing perception in the market was that there was still more price downside to go.

Sawmill offer lists certainly have grown over the past week or two, while order files remained static; still into mid-August.

Meanwhile, though wildfire news may be approaching fatigue levels in terms of ongoing coverage, enduring effects on every leg of the supply chain were far from tiresome.

A potential indicator of future market direction, quotes for Western S-P-F studs took a tumble as producers entered price-discovery mode. Buyers sat on their hands, hoping for a deeper dive downward before they decided to jump in and secure coverage, into mid-September and beyond. Studs producers endeavoured to extend their order files into September by entertaining ever deeper counter-offers as the week wore on.
With jobsite activity slowing down in many key markets due to hot weather and the summer doldrums, slim field inventories were not a huge worry for buyers – yet.
Madison’s Lumber Reporter
Madison’s Benchmark Top-Six Softwood Lumber and Panel Prices: Monthly Averages
Compared to the same week last year, when it was US$610 mfbm, the price of Western Spruce-Pine-Fir 2×4 #2&Btr KD (RL) for the week ending August 11, 2023 was down by -$213, or -35%.
Compared to two years ago when it was $539, that week’s price is down by -$142, or -26%.