Softwood Lumber Sales Explode on More Major Sawmill Curtailments

After inexplicably wallowing in the doldrums for 2019 so far, North America wholesaler softwood dimension lumber prices reversed spectacularly last week. US housing starts for May, released Tuesday morning, were relatively stable compared to April. Potentially helpful to players seeking understanding of current market conditions, prices quoted for the July contract of softwood lumber futures on the Chicago Merchantile Exchange crested over US$400 mfbm on Tuesday. Currently futures are at a $25 premium to cash (print) prices.
Benchmark North American construction framing dimension softwood lumber commodity Western Spruce-Pine-Fir KD 2×4 #2&Btr (RL) FOB sawmill wholesaler price (net FOB sawmill) absolutely skyrocketted last week, taking several other species’ lumber prices higher with it.
There is possibly no looking back until after the usual US home building season ends following Labour Day. For most of this year, buyers have hesitated to book orders — despite needing wood for ongoing building and construction projects — for fear that prices could go lower.
Right now, enough production has been taken offline to keep prices buoyed. Soon enough the fire ban will go into effect in Canada and the US Pacific Northwest. Thankfully, operators in these regions have well and abundantly-stocked log yards and should have enough feedstock to carry them through lumber manufacturing until the rains start again.

Sales of WSPF exploded following a Canfor announcement of sweeping curtailments across many multiple production facilities. — Madison’s Lumber Reporter

Abysmal price drops for most of this year completely turned around for the week ending June 14, 2019, with benchmark lumber commodity Western Spruce-Pine-Fir 2×4 wholesaler price spiking +$78, or +26%, to US$376 mfbm, from the previous week when it was US$298 mfbm. This week’s price is +$44, or +13%, less than it was one month ago. Compared to one year ago, this price is down -$276, or -42%.
Be ahead of these data releases … Don’t delay, this week’s softwood lumber market comment was published to the website Monday morning.

Madison’s Lumber Prices, weekly, are a good forecast indicator of US home builder’s current lumber buying activity ——> DETAILS

Madison's Weekly Movers & Shakers Softwood Lumber and Panel Prices Chart JUNE '19
SOURCE: Madison’s Lumber Reporter

In the past few weeks the price drops were slowing, so this huge upswing is moderating out the plummets of recent months. This week’s WSPF 2×4 #2&Btr KD S4S (RL) price is down just -$36, or -9%, relative to the 1-year rolling average price of US$412 mfbm. Last week it was -$120 lower. The 2-year rolling average price is US$451 mfbm.

As the US home building season moves into full swing, sawmill order files were extended into the week of July 1st, with “only the odd item” available sooner. — Madison’s Lumber Reporter

Producers of Kiln-Dried Douglas-fir lumber described a distinctly upward trend in pricing and business in general. Order files at these sawmills were typically into the week of June 24th, while some studs producers reported July 1st bookings. Mills again bemoaned the “brutal” cost of Doug-fir logs, which effectively ensured they would continue to operate at a loss for the time being. Players were happy to see construction markets all over the United States waking up finally however. There is wood inventory laying around, that got cleaned up with alacrity last week as scores of buyers eyed their empty stocks and jumped in to buy. Transportation was already “getting worse” with the increase in transit volumes this week. Due to slow rail cars, sawmills delivery was often two weeks out on essentially prompt stock.

Softwood Lumber Movers & Shakers: green and KD Construction Framing Dimension Lumber Prices JUNE 2019
SOURCE: Madison’s Lumber Reporter

For their part, Eastern Canadian lumber suppliers saw inquiry and follow-through increase palpably in both Canadian and US markets – though moreso in the latter. While ESPF mills didn’t boost their asking prices as much as their Western cohorts, roughly $10 increases were swallowed by customers with nary a peep. Early-July sawmill order files prevailed in standard grades while “weaker” low grade items could be found for quicker shipment.

Madison's Historical Softwood Dimension Lumber Price Comparison Table JUNE 2019
SOURCE: Madison’s Lumber Reporter

The above table is a comparison of recent highs, in June 2018, and current June 2019 benchmark dimension softwood lumber 2×4 prices compared to historical highs of 2004/05 and compared to recent lows of Sept 2015