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Softwood lumber prices bounce somewhat; US construction spending and employment jump: May 2019


May 7, 2019
By Madison's Lumber Reporter

Wholesaler (net FOB sawmill) prices of green Douglas fir 2x10s #2&Btr skyrocketed last week, up +$55 or +16%, to U.S. $355 mfbm as other — more standard — North American construction framing softwood lumber prices either stayed flat or bounced moderately as buyers and sellers came to some agreement on the supply-demand balance. The very latest data, out this week, show U.S. construction spending and especially construction employment up significantly. Latest update from producers is that recent log cost increases in the Pacific Northwest requires similar rises in manufactured lumber prices. Shrewd readers will know to immediately watch 5+ and low-rise commercial building starts, as Douglas fir 2×10 prices is heavily used in this U.S. real estate sector.

While no one was celebrating sales volumes last week, the resurgence of demand and plumper sawmill order files were encouraging. Also, last week was held the Western Regional meeting of the North American Wholesale Lumbermen’s Association (NAWLA), where some officials and representatives of North American softwood lumber producers provided the most recent updates to industry. 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

The complete turnaround, and indeed improvement, of U.S. construction employment and U.S. construction spending is very encouraging indeed; at the least for this coming 2019 construction season and at most for the coming year.

For the week ending May 3, 2019, Western Spruce-Pine-Fir KD 2×4 #2&Btr (RL) FOB sawmill wholesaler prices averaged U.S. $332 mfbm, no change from the previous week. This week’s price is -$34, or -9%, less than it was one month ago when it was U.S. $366 mfbm. Compared to one year ago, prices of this softwood lumber commodity are down -$117, or -26%.

Prices and sales activity varied but overall business continued to improve after last week’s curtailment announcements. — Madison’s Lumber Reporter

Sales volumes of Western Spruce-Pine-Fir lumber in the U.S. continued to ramp up last week but the pace of business was noticeably less intense than the previous week’s flurry of activity. Multiple lumber producers announced downtime for swathes of B.C. sawmills. Sawmills in the U.S. extended their order files by at most one week, with resultant bookings anywhere from next week to May 20 in some cases. According to secondary suppliers, producers were now “completely uninterested” in any attempts at counter offers. Most players assumed the wait for spring demand was over.

Western Spruce-Pine-Fir producers in Canada “settled in” to a better market after the fracas that ensued last week following significant curtailment announcement by several major sawmill operators. Sawmill order files stuck at around one to two weeks, and log decks remained “fine” even though spring breakup still prohibited most harvesting operations. — Madison’s Lumber Reporter

The latest data for U.S. construction employment and construction spending is very encouraging for at least this year’s building season, if not into 2020.

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