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Most softwood lumber prices stay flat as supply-demand balance is reached


January 20, 2021
By Madison's Lumber Reporter

As mid-January 2021 came upon us, it seemed like supply and demand for softwood lumber and panel products reached an equilibrium. Almost all prices were flat, except the 2×8 sizes, which dropped somewhat. Players agreed that this current lull could indicate a new level of asking prices at lumber producers and wholesalers. Field inventories with buyers were not at such emergency-low levels as they had been during almost all of 2020, but still no one was stocking up on supply as prices remained high compared to historical trends. The busy home building season is fast approaching; both Canadian and US housing starts data remains extremely rosy. Sawmills expect the usual spring rush of orders to arrive soon enough.

Softwood lumber prices seem to have experienced a peak in the first week of January, due to momentum from demand over the holiday break. By the second full working week of 2021 almost all softwood lumber prices were flat.

“Inquiries quieted down last week as buyers pulled back from ordering while sawmills tried to keep prices firm.” — Madison’s Lumber Reporter

Demand simmered down in the US Western S-P-F market last week as players compared lumber futures to current asking prices and decided to sit on their hands. Producers remained unworried, maintaining four- to five-week order files at their sawmills and easily selling enough volume each day.

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Canadian producers of Western S-P-F lumber were confident that demand would perk back up after the current lumber futures contract expired. Sawmill order files were four or more weeks out.

The supply-demand balance seemed to find an even keel in the second week of 2021, ending Jan.15, 2021, with benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr prices staying flat at U.S. $944 mfbm over the previous week. Last week’s price is +$292, or +45%, more than it was one month ago when it was $652.

“Stocking wholesalers on the busy U.S. Eastern Seaboard thought that the aggressive ascent in prices had perhaps come and gone. One thing was for sure in vendors’ minds however, this was a supply-driven rally, when usually the impetus comes from the demand side. Meanwhile, a large contingent of builders in the U.S. Northeast were unwilling to start more construction jobs due to lack of materials and payment delays as credit lines stretch to breaking points.” — Madison’s Lumber Reporter

Compared to the price one-year-ago, of U.S. $402 mfbm, last week benchmark softwood lumber item Western S-P-F KD 2×4 #2&Btr was selling for U.S. $944 mfbm which is +$542, or +135% more.

The below table is a comparison of recent highs, in Sept. 2020, and current Jan. 2021 benchmark dimension softwood lumber 2×4 prices, compared to historical highs of June 2018 and compared to recent lows of Sept. 2015: