Industry News Markets
Benchmark softwood lumber price loses ground, specialty item prices tank

The price of benchmark construction framing dimension softwood lumber commodity Western Spruce-Pine-Fir KD 2×4 #2&Btr dropped another -$8 last week as customer reluctance to buy won over supplier stubbornness to keep prices higher. For their part, many specialty items like Douglas fir green, studs in Eastern Canada, and plywood dropped significantly as players were better able to assess the supply-demand balance. Having just been celebrated in Canada, the U.S. Thanksgiving long weekend looms into view. This date usually marks the beginning of real slow-down of construction activity in the U.S., thus is often the time of year when lumber prices are lowest. Of course, that depends on the severity and location of storms — and, for this year anyway — wildfires in California.

This week the annual North American Wholesale Lumbermen’s Association (NAWLA) will be held in San Antonio, Tex. Madison’s intrepid lumber market analyst, Earl Heath, will be there! Do look out for Madison’s at the sessions, networking, and on the trade show floor…we are always looking for more sources at the sawmills and for the latest scoop on lumber trading activity. Keep reading to find out more:

Last week Western Spruce-Pine-Fir KD 2×4 #2&Btr lost -$8, or -2%, to close at U.S. $368 mfbm. Last week’s price is also -$8 less than it was one month ago. Compared to one year ago, this price is up +$2.

Demand and prices were generally flat to down, in both lumber and panels. — Madison’s Lumber Reporter

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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 U.S. home builder’s current lumber buying activity

Compared to historical trend, last week’s WSPF 2×4 #2&Btr price is up +$6, or almost +2%, relative to the one-year rolling average price of U.S. $362 mfbm, and is down -$77, or -17%, relative to the two-year rolling average price of U.S. $445 mfbm.

Traders of WSPF lumber in the U.S. had hoped demand would pick up some steam after a lackluster kickoff to October, but lumber purveyors found every transaction was a bit of a fight. — Madison’s Lumber Reporter

Buyers of WSPF lumber in the U.S. remained reticent and cautious even as their already-low inventories ran down further. Two-week order files were common for sawmills. Transportation was relatively smooth in the Western United States and secondary suppliers often had decent tallies available for quick shipment. Customers didn’t feel any pressure to act quickly or secure large volumes. Meanwhile in Canada, producers of WSPF commodities sold a bit each day but demand overall left much to be desired considering the time of year. Despite solid construction activity persisting in many regions of both the U.S. and Canada, buyers were slow to make deals and continued to purchase scant volumes. Low transit volumes made shipments more timely and helped customers hold off buying when they wanted to. Currently customers are confident that when downstream orders materialize they will be able to get what they need from either sawmills or wholesalers in a timely fashion.

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