The strategy for lumber industry players is to end the year with no inventory on-hand, so the focus now is on selling out any remaining wood at lumber yards.
Since 1952 Madison’s Lumber Reporter has established itself as the most reliable source for North American lumber prices and industry news. By providing a true 360º perspective on all aspects of wood products’ manufacturing, Madison’s makes you better equipped to anticipate market conditions.
Let’s dive into the data:
- Most customers had already ordered, before US Thanksgiving, whatever lumber they needed to end this year. These latest softening prices did attract some increased interest, however buyers generally chose to stay on the sidelines in hopes that prices might drop further.
- Sawmills were booked for production right up to the 2-week holiday closures so were not much motivated to complete more orders at lower prices.
- The Madison’s Lumber Prices Index for the week ending December 20, 2024 was US$470 mfbm. This is down -5%, or -$24, from the previous week when it was US$494, and is down -7%, or -$34, from one month ago when it was US$504.
- Looking at lumber prices, in the week ending December 20, 2024 benchmark softwood lumber item Western Spruce-Pine-Fir 2×4 #2&Btr KD (RL) was US$435 mfbm, which is down -$30, or -6%, from the previous week when it was $465, and down -$26, or -6%, from one month ago when it was $461, according to the latest data from Madison’s Lumber Reporter.
Compared to the same week last year, when it was US$414 mfbm, the price of WSPF 2×4 was up +$21, or +5%. Compared to two years ago when it was $390, that week’s price was up +$45, or +12%.
The greatest consumer of North America lumber commodities, by far, is US new home construction. Single-family housing starts, which account for the bulk of homebuilding, in November were more than +6% higher than October’s 950,000 units, at a seasonally adjusted annual rate of 1.01 million units but fell -10% from a year ago.
Examining the “actual” data (not seasonally-adjusted), the total of single-family starts for January to November this year are 937,700 units, a +7% increase over the first eleven months of 2023 when it was 874,800 units. Single-family permits showed a similar increase, up +6% year-to-date, to 911,300 permits, compared to 853,700 for January to November 2023.
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Drilling down to the finer details:
- Lumber buyers sought coverage of any holes in their inventories they felt they needed to fill before the Holidays.
- Sawmills were winding down production schedules.
- Lumber commodity prices were flat or slightly down from the previous week.
- Sellers didn’t have a ton on their offer lists, but availability did grow slowly on dropping demand.
- Producers were increasingly open to counteroffers as they cleaned up their year-end inventories.
- Buyers aggressively pursued their wants and needs among both primary and secondary suppliers.
- Ample prompt availability of 2×4 dimension lumber remained.
According to the latest issue of the Western Wood Products Association’s monthly Lumber Track, lumber manufacturing volumes in the US for January to September this year were down -4%, to 27,504 MMfbm, from 28,578 MMfbm in the first nine months of 2023.
In Canada, lumber manufacturing volumes are almost flat, at 15,490 MMfbm for January to September 2024 compared to 15,257 MMfbm in the same time last year.
It is important to note that the -4% drop in lumber production for British Columbia was taken up by Alberta and mostly Quebec, where volumes are up +4.5%.
Now that interest rates have started to go back down, and the uncertainty of the US Presidential election is resolved, the US home buying consumer is returning to the sense of confidence which was more usual in recent years past. As well, the extreme volatility of lumber prices that shocked home builders and contractors in 2020 and 2021 is now well in the past.
As demonstrated by the graphs here, the annual changes of lumber prices have returned to the more regular seasonal trend; of an approximately US$150 per mfbm change throughout the year. This also provides more sureness to the construction industry in making their plans for new building projects in the coming year.