Softwood Lumber Market Settles Down, Prices Drop Further

August 3, 2018 — Operators have well ascertained their inventories, and supply in the pipeline, against the immediate needs of end-user customers in the US. The recent unknowns of “where is my wood??” have been resolved and, with some interruptions, supply is flowing again across North America.
A looming long weekend in Canada has folks more motivated to get business done and get off to the cottage than to haggle over the few bits of wood they might need for immediate fill-in.
Some sawmills in the west claimed two-week order files but customers knew better. In the end, a good price was settled on. Most agreed that the extreme volatility of the past few months might be behind us.

The below table is a comparison of June 2017 and July 2018 prices for benchmark dimension softwood lumber 2×4 prices compared to historical highs of 2004/05:

SOURCE: Madison’s Lumber Reporter

Current Softwood Lumber Prices Compared to Recent and Historical Highs

Buyers vacationed while little work occurred at scorching jobsites; futures remained resoundingly negative.

Producers claimed one- to two- week sawmill order files, while holding enough inventory on hand to have to reduce prices as customer counter-offers pounded the numbers relentlessly downward.

As most of this year, or the past year even, futures responded with a brutal correction which provided no insight into actual lumber prices that week.

The usual summer holiday break in Quebec will be over next week as those sawmills and forest operators get back to work. An increase in supply is expected to result, especially as there is still one full month of production time before Labour Day weekend. Which is commonly known as the “beginning of the end of lumber demand” into the winter season.

Sawmills report plump log decks. Log supply interruptions are possible in British Columbia as wildfire season really comes on. Otherwise operators are aware of this usual summer situation and have planned their timber procurements accordingly

Terrifying wildfires in California do not bode well for the coast, whether BC or US, as a second heat wave is on and already this week many lightening strikes started fires in the forest.

SOURCE: Madison’s Lumber Reporter