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Lumber Outlook for 2016

As we reflect back on the 2015 lumber market, sources say it was “business as usual.” As always, no one can put any reasoning to the majority of the market movements, whether up or down.

What we do know for sure is the market will continue to ebb and flow in 2016.

The U.S housing market is expected to continue to improve, along with the confidence of first-time homebuyers. We should see the same poise with the lumber markets in 2016, according to sources. Analysts are forecasting a strong finish in lumber sales in the last quarter of 2015, which will be published around February, and when all the numbers come in most will show that the market will remain strong in the first quarter of 2016.

The main factor on lumber prices for the first quarter is weather. The weather will be a hot topic for mills, wholesalers, and manufacturers, as bad weather impacts supply, prices, and the ability to move product.

The weather will also affect the barn manufacturers’ ability to receive product from wholesalers and deliver the final product to customers. Some dealers said that last year (2015) began on a slow note and was delayed because of re-cord-setting cold weather and snow.

Southern yellow pine mills are expected to run their mills at full capacity for the next several months, sources say, because treaters are buying in for spring. Some mild discounts could be expected in January, but February and March should see stronger sales and numbers. Demand for 4 by 4s and 4 by 6s picked up a bit in December, and many mills will be pricing these timbers on a “price time of shipment basis” so not to give up any margin in their wood. Premium decking gave way to lower pricing amid limited sales, but this is more than likely short lived when the box store buyers start to ramp up their purchases for the spring.

Spruce is mostly quiet, and purchases were mainly flat, according to sources. Buyers are moving in on purchases with caution because of the turmoil in global political affairs. Most believe the spruce market is going up, but of course no one knows how high. Sources say that if you have available space in your warehouse, it is probably a good time to use it for some spruce. Mills will not continue to build order files with little to no profit in the effort, and most have said they would offer time off to their mill employees rather spinning their wheels. Carload volumes are the way to go if you have the space to capitalize on the soft prices.

OSB sales were slow in December, but mills are still being firm with their prices. If the housing market will continue to gain traction, it’s fair to say that OSB will stay in the mid-2000s for the first quarter of 2016, sources say. As we get closer to the summer months, we may see OSB go above 250 and when we get to the fall, if there is the slightest hint of a hurricane, we all know what this will do to the market. Sources recommend covering 100 percent of your summer and fall needs before the summer arrives.

Plywood mills are working with heavy inventories; wholesalers are being held to modest long positions. Wholesalers are not buying enough to get past two months; thus the thought is the market is pretty stagnant and not moving up anytime soon, according to sources. As with any mill in the winter months, bad weather will play a role in the price of plywood, especially if the mills are in the deep south and mid-Atlantic regions of the United States.

T1-11 is still a strong commodity with mills, manufacturers and consumers alike. As consumption with manufacturers continues to grow, the mills seem to be keeping up with demand, barely. Many box store buyers have jumped on the bandwagon with T1-11 because consumers seem to favor the product; therefore, these sales take away from the shed industry’s supply. This demand limiting supply keeps the T1-11 price strong

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