North American Lumber Market Update: April 2017

Next week, Canadian forest products operators will be put out of their uncertainty and will find out any preliminary trade actions on softwood lumber by the US.

Final determinations will be at the end of November 2017, for both CVD and AD duties.


Benchmark dimension lumber commodity Western Spruce Pine Fir KD 2×4 #2&Btr up US$140 ( 31% ) to US$450 mfbm compared to one year ago.

Eastern Spruce Pine Fir KD 2×4 #2&Btr up US$74 ( 20% ) to US$490 mfbm compared to one year ago.
Southern Yellow Pine KD 2×4 #2&Btr up US$75 ( 15% ) to US$515 mfbm compared to one year ago.
Douglas Fir green 2×4 #2&Btr up US$60 ( 15% ) to US$395 mfbm compared to one year ago.

SOURCE: Madison’s Lumber Reporter

Writes Andrew Hecht on Seeking Alpha April 11, “Lumber Is A Beast.

Canadian and US lumber production are at improving volumes, according to the Western Wood Products Association monthly Lumber Track April 13.

North America Lumber and Panel Markets Update: April 2017


On Monday, April 10 lumber finally broke through the US$400 level on the Chicago Mercantile Exchange, a momentous occasion for the wood market as those two by fours have not been trading at such a lofty level in over a decade.

Andrew Hecht – Seeking Alpha

The quarterly chart of lumber futures dating back to 1972 highlights, lumber traded to a high of US$414.60 per 1,000 board feet on Monday. The next level of technical resistance was at the 2005 highs of US$418.50 Tuesday, less than $4 above this week’s high. Above there, US$461 stands as a target followed by the 1996 highs at US$488, explained Hecht.

The all-time peak at US$493.50 dates back to 1993.

Lumber has been making higher lows and higher highs on the quarterly chart since 2009 when the price moved to US$137.90 in the wake of the global financial crisis. These days, lumber is telling us a great deal and confirming that the US economy is in the best shape in many years.


The economy-wide PPI declined 0.1 per cent in March, falling short of market expectations. Three-fourths of the decrease is attributable to prices paid for services. Prices for final demand goods also edged lower by 0.1 per cent. Final demand prices for core goods (i.e. goods excluding food and energy) continued the upward trend that began in November 2016, rising 0.4 per cent. Prices for core goods less trade services climbed 0.1 per cent.

Most of the decline in prices paid for final demand goods was due to a 2.9 per cent drop in energy prices. Conversely, the index for final demand foods rose 0.9 per cent. Over half of the decline in prices for final demand services can be traced to prices for final demand ser- vices less trade, transportation, and warehousing. Loan services led the March decline in services prices, falling 4.1 per cent.

US Western Lumber and Log Prices

Lumber prices continue to be robust two months in a row. Logs are also strong. Home values continue improving with relatively brisk sales and building. Industry manufacturing has improved, said Rick Sohn in the News-Review April 5. Recent trends of lumber, logs, home construction, and housing markets, are compared.


The log price in Oregon is holding up at US$720, continues Sohn. The lumber price has also held for two months in a row, at US$360. This is the highest price for studs since 2013, and before that, since 2005. 2013 was the year the snails-pace recovery began in earnest. One year earlier, in 2012, median home prices hit rock bottom ($151,600 in January, 2012). Housing starts moved from the 800’s in 2012 to 1000’s in 2013 and there was a feeling of optimism. During the midst of the Great Recession, mill production levels were at their lowest and the increased demand in 2013 raised the lumber prices. Once mill production increased from basement levels, in anticipation of increased housing starts, prices dropped again. Now we are entering a new cycle.

There is the question of log supply, Sohn details. In southern Oregon, log supply may be more limited than it was in the past. While private landowners do tend to increase their log production when log prices are higher, federal lands logging by the Forest Service and BLM is very limited.


Readily visible on the graph above is the decline in the premium for Douglas-Fir—due in large part to Chinese demand fortifying hemlock prices, according to Small Forest Landowner News February 13. Also readily visible is the drop in prices from late 2014 to early 2016. The price of a ‘typical’ DNR log moved up sharply from a two-year plateau in 2013 to $591/mbf in 2014. However, prices declined through 2015 to average US$521/mbf. The decline in log price is primarily due to the slowdown in demand from China and ample regional supply of both logs and lumber. A price decline was largely foreseen, though the depth of the drop was unexpected.

Log prices in 2016 were expected to be slightly higher than 2015 prices, held back by the same issues plaguing lumber prices, and then to begin increasing in 2017. Prices thus far have averaged US$531/mbf.