LUMBER MARKET 06/10/2022



Market Update: Buyers’ optimism and confidence in the lumber and panel markets continued to sour during the week. Higher interest rates, rampant price increases on food and fuel etc., coupled with other socio-economic headwinds and declining lumber and panel market prices had buyers limiting their engagement with the markets to fill in volumes, which had to ship promptly. Field inventories are lite, especially for this time of the year, but buyers just feel more comfortable on the sidelines as they wait for the markets to show some signs of stabilizing. With mill production levels remaining at 80%, or in most cases significantly higher, unsold inventory continues to overwhelm mill covered storage facilities. Transportation issues continue to improve in some regions of North America. While in others the lack of trucks and empty railcars and train crews to move filled cars remained a gut-wrenching problem. It is also important to remember that some of the lumber and panels currently in transit were purchased at high triple and quadruple prices.


Spruce Markets: Downward price pressure continued to persist in both the Eastern and Western SPF Std. & Btr., and No.2 & Btr., markets again this week. Traders noted the unusual and widening gap in pricing between WSPF and the higher valued ESPF markets. Several ESPF mills reported a better flow of empty railcars coming to their facilities. Buyers trying to avoid further exposure to the markets limited their activity to fill-ins from a local 2-step distributor. Should a buyer venture into the market for a truckload or carload, the mill or office wholesaler’s quote was significantly countered, and the product had to ship immediately. Mills started the week quoting SPF construction grade below last Friday’s levels and prices traded lower from there, with many items available for shipment as soon as transportation could be arranged. Buyers’ interest in the stud trim markets was limited at best. Last week’s triple-digit price correction in studs did prompt some limited activity, but not enough to eliminate the significant buildup of on ground inventory at the mills. As a result, mills started the week quoting stud trims below last Friday’s levels and prices slid lower from there, with many items on the ground and ready to ship.


CME Lumber Futures: The CME Lumber Future Contract for July will expire on Friday, July 15th, 2022, at 12;00 Noon CDT. For the past 5-days (6/3 – 6/9), CME Lumber Futures were up 1-day, and down 4-days. For the past 5-days CME Futures have lost -$30.20 and are trading below the Midweek Cash Market of $595 by $26.700, CME Futures at $568.30. One Year Ago, today (6-9-21), CME Futures closed at $1164.20.

Hem\ White Fir: Buyers continue to distance themselves from the Hem \ White Fir markets. Pro dealer purchases this week were limited to fill-ins, and this only after a substitute was no longer available at their facility. Mills started the week quoting below last Friday’s reduced-price levels and prices traded lower from there; with many items on the ground and ready for prompt shipment as soon as a truck or empty railcar could be secured. Throughout the week producers encouraged buyers to provide them with feedback and listened attentively to counteroffersStud trim sales varied from species to species and in many instances from mill to mill. Producers started the week quoting below last Friday’s levels and prices traded at or moved lower from there, with some mills quoting prompt shipment, while others claiming to have developed a modest order file offering shipment for the week of 6/20+/-.


Green Doug Fir: The fear of additional price reductions in the Green Doug Fir (GDF) market, had buyers’ limiting their interaction with the market to immediate needs that had to ship promptly. Declining prices in the KD markets also proved to be a distraction for GDF buyers. Producers started the week aggressively searching for a trading level and prices moved lower from there, with many items available for prompt shipment, if a truck or railcar could be quickly secured. Lower prices, particularly on the narrow widths (2x4 – 2x6) did little to stimulate buyer interest. The pressure from the price correction in the KD stud trim markets, continues to negatively impact GDF stud sales. Mills started the week quoting GDF studs aggressively below last Friday’s levels and prices deteriorated further from there, with prompt shipment available on most trims.


Cedar Lumber: Buyers interest in the Western Red Cedar (WRC) lumber market remains subdued. Buyers continue to limit their purchase to urgent needs that must ship promptly. The price correction in other lumber products has made buyers even more cautious in their purchase of specialty items. WRC producers attempting to reignite buyers’ interest in the market started the week, once again, lowering prices on decking, narrow width dimensional lumber and S1S2E boards. Sadly, that had negligible impact on the market. Mills continue to hold the line on pricing close to last Friday’ levels on fencing, wider width dimensional lumber, siding and timbers and prices traded in a narrow range from there. Producers noted that the Freshet was tightening log supplies even further and prices are most definitely on the rise. Transportation lanes improved in some areas but remained tight in others.

Southern Pine: Steadily declining prices, coupled with additional economic headwinds continued to limit buyers’ interaction with the Southern Pine No.1 and No.2-dimensional lumber markets. Missing from the markets, again this week, were large box and pressure treated buyers. As they continue to limit their exposure to the markets’ downward cycle. Mills started the week quoting below last Friday’s levels and prices declined further from there, with most items on the ground and ready for prompt shipment. Regrettably, transportation issues continue to add 1 – 2+ weeks onto shipments. In sympathy with the rest of the SYP complex, high-grade sales weakened for the first time this week. Mills started the week quoting high-grade at or modestly below last Friday’s levels and prices hovered close to those levels from there; for product available for shipment the week of 6/20+/-. Falling prices in construction grade products, had mills searching for a trading level for low-grade stock as well. Stud trim sales remain in the doldrums. Mills started the week with inventory on the ground and quoting stud trims modestly below last Friday’s levels and listening to counteroffers.


Pressure Treated: As brite feedstock prices continue to work lower, pro dealer treated lumber, panel and accessories buyers continued to hold their facility inventories in check. This is even as tract and multifamily builders continue to report strong jobsite activity, and a need for a steady stream of treated lumber products delivered to their projects. Sales in Florida, particularly southern Florida were noticeably slower at the start of the week, as the area recovers from several inches of flooding rain over the weekend. Large box retailers are reporting modest follow through from last week’s long Memorial Day holiday weekend uptick in lumber section sales. The results of Q1 treated lumber export sales report reveals that led by the Caribbean and Mexico, year-over-year sales were 27% higher. Trucking availability is easing in many lanes, but there are still a few pockets that are continuing to experience shipment difficulties.


OSB & Veneer Panels Overview: Downside risk, economic worries, and transportation issues continue to be factors in every panel buyer’s purchasing decision. With prices still in the process of correcting, buyers are making every effort to limit their purchases to immediate needs; turning to local 2-step distributors who can provide shipment on the next route truck, which, further limits their exposure to the markets’ downturn. Some 2-step distributors, however, are starting to report that they too are running low on several key items, as they are also trying to limit their exposure. Those willing to consider truck or railcar volume took mill and office wholesaler quotes and countered them heavily and demanded immediate shipment. It is being reported that some buyers are now asking for some form of price protection to offset shipment delays. Incidents, such as the OSB mill fires at LP’s Peace Valley and Tolko’s High Prairie facility would have normally sent the OSB and residually the plywood markets moving in an upward direction. To date other than raising an eyebrow, they have had no impact., and LP’s mill is back up running.


OSB: The standoff between buyers and producers in the OSB markets continues. With prices varying widely from one production zone to another, buyers cast a wider net, contacting mills outside their typical trading zone to see what mills in the other zones might be willing to sell truckloads or greater volume for. Other buyers continue to claim that they have sufficient on ground inventory to cover their near-term needs, while remaining confident that should need arise, they will be able to find additional replenishment from a variety of sources. Mills started the week quoting OSB below last Friday’s levels and prices proceeded to decline further from there, with many mills having panels on the ground and ready for prompt shipment. Late in the week it was being reported that mills were contacting their larger volume customers offering ‘deal between us’ pricing, but those offers came with a large number of trucks or cars that needed to be purchased to attain those best customer levels.


Southern Pine Panels: Buyers of Southern Pine Rated Sheathing continue to deal with the aftermath of a lawsuit settlement that will greatly limit, if not eliminate the number of imported panels coming from Brazil into the U.S., until such time as the defendant in the lawsuit, PFS-TECO, or other grading agencies can demonstrate compliance with the PS 1 standard required by U.S. building codes. Buyers, jarred by the announcement moved into the markets last week to cover the remainder of their June needs. However, this week buyers were back in their conservative mindset, with downside risk a concern. Mills started the week quoting at last Friday’s levels and prices proceeded to trade at or modestly on either side of those levels from there; for production available for shipment the week of 6/27+/-. The inquiry and sales pace of value-added panels, underlayment, sanded, siding, concrete form, and other specialty panels remains little changed from previous weeks. Mills started the week quoting the entire value-added complex at or below last Friday’s levels and prices hovered close to those levels from there; for production available for shipment the week of 6/20+/-. Transportation issues in the South varied widely from mill to mill. Some producers are reporting that securing trucks and empty railcars is improving, while others continue to complain about the lack of those same resources.


Western Fir Panels: Buyers continue to maintain a low profile and conservative replenishment approach to the Western Fir Rated Sheathing market. Receding prices throughout the dimensional lumber complex only served to make buyers more cautious and determined to limit their exposure to both the correcting lumber and panel markets. Carload volume buyers from the Midwest and Northeast were absent again from the market this week. That left truckload buyers from the West Coast, Rocky Mountains, agricultural bin sector, and Western Canada to pick up the consumption slack. Which they were unable to do. Mills started the week quoting below last Friday’s levels and prices trickled lower from there, with some producers offering prompt shipment, while others were quoting production scheduled for the week of 6/20+/-. The inquiry and sales pace in the CD Struct I, CC, CC PTS and Mill Cert panel markets, remain sluggish. Producers started the week quoting the entire complex at or below last Friday’s levels and prices continued to trade in a similar pattern from there; for production available for shipment the week of 6/20+/-. The inquiry and sales pattern in underlayment, siding, concrete form, and other specialty panels continues to trade at previously established levels. Mills started the week quoting underlayment below last Friday’s levels, while holding prices on sanded, siding, and concrete form at last Friday’s levels; with production available to ship the week of 6/20+/-. Logistics issues appeared to ease for some mills, while others continue to report continuing transportation problems.


* This is a general Lumber Market Report provided by True Value.

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