Lumber Market Report, News, V8I3

Lumber Supply/Prices Ease … for Now

(Photo courtesy of Towfiqu Barbhuiya from Pexels)

Lumber prices turned lower as markets digested geopolitical uncertainty and higher energy and food prices. 

Once again, a buying opportunity presented itself, and most traders did not step in to buy the dip right away. With the inflation rate running at a multi-decade high and the war in Ukraine hampering supply chains, builders were concerned about the health of the U.S. consumer and economy.  

Although lumber buyers have begun to restock inventories, they have stayed away from volume purchases. 

A strong March housing market report and fears that home demand, single-family and multi-family, would overwhelm supplies once building season arrived created some support for the market. 

As home and shed builders contend with supply-chain issues and future higher mortgage rates, many wonder whether they can continue to pass through higher costs to their customers without destroying demand. 

Adequate lumber railcars and trucks pushed down prices of SPF and SYP lumber for the three weeks ending April 22. Supply-chain issues moderated but did not disappear.   

On the demand side, housing starts remained strong; however, completions retreated suggesting that supply chains could not keep up with strong U.S. housing demand.  

SYP 2 by 4 #2 prices declined triple digits. Domestic Western SPF 2 by 4 #2 and better prices decreased triple digits, while the same items in Eastern SPF fell even harder. 

Euro Premium spruce dimension grades declined but at a slower pace than the move in Domestic premium #2 prices. Euro Premium and Domestic Premium stud prices lost ground, although not as much as some other sizes. 

Lumber supply issues may have eased for the near term, but possibly at the cost of future growth. Central bankers have indicated higher interest rates will be forthcoming to curtail growth to get prices under control. 

As home building growth moderates and consumer inflation subsides, lumber prices will become more predictable and may even return to historical patterns.   

My advice is to stay in close communication with your lumber and building material suppliers and dealers. Let them know sooner rather than later about your requirements.  

If you have any questions about the market or your strategy, you can always reach me at my contact information below.

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April/May 2024