Note from the Forest 7-1-22 Edition

Ladies and Gentlemen:?

Buyers from both sides of the border started the week on a mission and with a plan they needed to execute. Check on recently placed and contract orders, cover their remaining near-term needs and once that was completed, head out and enjoy the long holiday weekend. As a result, sales had a steady to strong start to the week, but by Thursday morning it was clear that both markets had slipped into holiday mode. Lumber mills ended the first half of 2022, selling well below where the year started. However, after several weeks of correction, prices have at minimum showed signs of stabilizing and on many items, prices have been able to move modestly \ moderately higher. The panel markets ended the first half of 2022, also selling below where the year started. While OSB has showed early signs of trying to firm, the plywood markets are still looking for a trading level. Albeit they both moved closer to find a trading level during the week. As expected, trucking tightened during the week – rail service remains iffy in many regions. ??

The National Association of Realtors? (NAR) reported on Monday (6-27-22). their Pending Homes Sales Index (PHSI), which is based on signed real estate contracts, not actual closings, for existing single-family homes, condominiums, and co-ops, increased 0.7%, in May 2022 from April, to a reading of 99.9. The first month-over-month increase in the past 6-months. An index of 100 is equal to the level of contract activity in 2001. Year-over-year contract signings have also declined -13.6%. The U.S. Census Bureau and the Dept. of Housing and Urban Development jointly announced on Friday (6-24-22), that new residential single-family home sales for May 2022 were at a seasonally adjusted annual rated (SAAR) of 696,000, according to estimates. This is 10.7% above the revised April rate of 629,000 but is -5.9% below the May 2021 estimate of 740,000. The median sales price of new houses sold in May was $449,000. The average sales price was $511,400. The SAAR estimate of new houses for sale at the end of May was 444,000. This represents a supply of 7.7 months at the current sales rate.?

Spruce Markets -: Follow through from last week’s increased activity in both the Eastern and Western SPF Std. & Btr., and No.2 & Btr., was steady, and a bit stronger than many traders had anticipated for a holiday shortened week. Buyers having covered their near-term needs have returned to the sidelines, awaiting additional signs that prices were going to at least hold at, or progressively move above current levels, before deciding on additional replenishment. Mills started the week quoting at or above last Friday’s levels and prices trended higher from there; for production available for shipment the week of 7/18+/-. Demand for low-grade remains slow but steady. Mills started the week quoting low-grade at or a few dollars above last Friday’s levels and prices traded in a similar pattern from there; for production available for shipment the week of 7/11. Stud trims have regained their groove. Mills started the week quoting stud trims above last Friday’s levels and prices moved marginally higher from there; for production available for shipment the week of 7/18+/-. ?

CME Lumber Futures –: The CME Lumber Future Contract for July will expire on Friday, July 15th, 2022, at 12;00 Noon CDT. For the past 5-days (6/24 – 6/30), CME Lumber Futures were up 4-days and down 1-days. For the past 5-days CME Futures have gained $46.30 and are trading above the Midweek Cash Market of $620 by $43.30, CME Futures at $663.30. One Year Ago, today (6-30-21), CME Futures closed at $716.00.?

Hem\ White Fir -: ?The Hem \ White Fir Std. & Btr., No.2 & Btr., markets started the week building on last week’s increased activity. The long holiday weekend celebrations on either side of the border contributed to a slower pace as the week progressed. The markets’ overall tone is positive, but buyers still remain conservative and cautious in their purchases, limiting them to near-term needs; still not totally convinced that there is or will be sufficient field demand to move the markets substantially higher. Mills started the week quoting construction grade at or on either side of last Friday’s levels, and prices traded in a similar pattern from there; for production available for shipment the week of 7/18+/-. Sales of low-grade modestly improved in some species but remained a challenge in others. Mills started the week quoting low-grade at or on either side of last Friday’s levels and prices traded close to those levels from there; for production available for shipment the week of 7/11+/-. Higher prices for stud trims, brought buyers who had been absent from the market for over a month, back with needs to cover. Mills started the week quoting above last Friday’s levels and prices trended higher from there; for production available for shipment the week of 7/18+/-.

Green Doug Fir -: ?Green Doug Fir (GDF) Std. & Btr., and No.2 & Btr., mills were able to build on last week’s uptick in activity. Buyers remain cautious and no one purchased large volumes, but enough product was sold to support the mills pricing strategies. With limited on ground inventory mills started the week quoting above last Friday’s levels and prices traded at or edged higher from there; for production available for shipment the week of 7/18+/-. Low-grade sales remain challenging. Mills started the week quoting low-grade at or below last Friday’s levels and prices traded in a similar pattern from there, with shipment available for the week of 7/18+/-. GDF stud trim sales continue to revolve around 2x4-9’, while interest in the other widths and trims within the complex remain limited. Mills started the week quoting GDF stud trims at or below last Friday’s levels and prices traded in a similar pattern from there. Traders reported truck availability tightened during the week. ?

Cedar Lumber -: ?Western Red Cedar (WRC) lumber producers remain disappointed in the market’s lackluster seasonal sales pace. There were a few ripples of activity during the week, as buyers sought coverage for specific products, particularly fencing items, to fill immediate inventory needs, which needed to ship promptly. Again, this week, sales to large box store retailers were limited and pro dealer speculative purchases were close to nonexistent. Mills continue to struggle with the sales of narrow width dimensional lumber, S1S2E boards and decking. Mills lowered the prices on these items again at the start of the week and encouraged buyers to make counteroffers. The sales of wider width dimensional lumber, fencing, siding and timbers remain slow but steady. Prices on these items hovered close to last Friday’s reported levels. ????

Shake & Shingles -: ?Demand for Western Red Cedar (WRC) Shake and Shingles slowed further during the week. As a lack of available new products for sale, and delays in shipment of product previously purchased had buyers turning to alternative species or manufactured products to meet their builder customers jobsite needs. Sales into the Northeast U.S., typically a major WRC consumer area, were particularly sluggish. Canadian producers reported again this week a dearth of available raw materials, and many, once again, were either closed for the entire holiday shortened week, or worked only 1 – 2 days. Prices remain flat or in a modest upward tilt, but the trajectory was nowhere as steep as in the previous weeks. This as producers are now fighting to retain their share of the exterior marketplace business.??

Southern Pine -: ?Activity in the Southern Pine No.1 and No.2-dimensional lumber markets were mixed to start the week and trading slowed as the week progressed. Buyers’ focus remains centered on the narrow widths, while their interest in wider widths remained limited. Buyers who purchased near-term needs last week have returned to the safety of the sidelines. Buyers in the marketplace this week were looking for specific inventory items, with minimal volumes that needed to ship promptly. Mills started the week quoting narrow widths at or above last Friday’s levels, while quoting the wider width at or below last Friday’s levels and prices traded in a similar pattern from there; with some items available for prompt shipping, or as soon as logistics could be arranged, to the week of 7/18+/-. High-grade production is still trailing demand. High-grade producers started the week quoting at or above last Friday’s levels; for production available for shipment the week of 7/25+/-. Low-grade sales remain lackluster. Mills started the week quoting low-grade flat to modestly below last Friday’s level and priced traded in a similar pattern from there, with many items on the ground and ready to ship. Stud trim sales continue to hold steady. Mills started the week quoting stud trims at last Friday’s levels and prices held at or inched higher from there; for production available for shipment the week of 7/18+/-. Treaters returning to the small square and timber markets to replenish lite facility inventories were welcome news to producers. Mills started the week quoting 4x4 – 4x6 – 6x6 at or above last Friday’s levels and prices traded in a similar pattern from there; for production available for shipment the week of 7/18+/-. Treaters’ appetite for 5/4 x 6 Standard and Premium Radius Edge Decking has also improved. Mills started the week quoting R.E.D. at or modestly above last Friday’s levels and prices held close to those levels from there; for production available for shipment the week of 7/18+/-.?

Pressure Treated -: ?Sales of pressure treated lumber, panels and accessories remain close to pre-pandemic seasonal levels. Treated buyers, however, are uncertain of the market’s overall strength, and remain concerned that sales could \ would slow further during the second half of the year. Contractor yards had anticipated and were not surprised when sales to large tract and multifamily builders slowed over the course of the week. Between hot and humid weather conditions and the long Canada Day and Independence Day weekend celebrations, jobsite activity was not quite as robust as in previous weeks. Pro dealers treated buyers continue to maintain lean field inventory levels but were typically allowing 1 – 2 weeks transit time for any purchase made from a pressure treater without dedicated truck fleet service. Large box store retail treated buyers, on both side of the border were hoping that the long holiday weekend celebrations will increase DIY’ers interest in outdoor projects. Treated prices remain in lockstep with brite feedstock markets. As a result, price on narrow widths dimensional lumber inched higher, while in the wider widths prices were flat to lower. ?

OSB & Veneer Panels Overview –: ?With panel traders preparing for their long July holiday weekend on both sides of the border, getting an accurate reading on the panel markets proved to be challenging. OSB showed signs of finding a trading level early in the week and buyers in need of replenishment stepped in to cover those needs, but speculative purchases were still not a consideration. Western Fir Rated Sheathing mills started the week quoting at last Friday’s levels but quickly discovered that without their acceptance of modest counteroffers their sales would once again be limited. Southern Pine mills started the week with a modestly improved inquiry level but converting those inquiries into orders proved difficult unless it could ship immediately, and unsold inventory remained a problem throughout the week. Trucking tightened during the week, not unexpected with Canada Day being celebrated this Friday and U.S. Independence Day on Monday. ?

OSB -: ?With prices closing in on, or already at, pre pandemic levels, buyers’ interest in the OSB markets improved at the start of the week, and it appeared that a bottom was trying to form. The improved activity early in the week provided OSB mills with an opportunity to hold prices firm to higher and prices held at or traded on either side of those levels from there; for production available for shipment the week of 7/18+/-. Trading did slow as the week progressed as buyers on both side of the border prepared for a long summer holiday weekend. Secondaries with contact ownership and feeling the pressure from mills to stay within the terms of their contract, which is to provide them with a firm destination, found it a bit easier this week to find interested buyers and a trading level for that ownership. ??

Southern Pine Panels -: Southern Pine Rated Sheathing producers started the week with unsold inventory and making outbound calls to buyers hoping to find a price that would prompt an offer to purchase volume as small as a highly mixed truckload. Similar offers were made to office wholesalers and the co-ops as well. Lower prices, failed to boost buyers’ confidence in the markets and with a long summer holiday weekend approaching, many traders were more willing to discuss their weekend plans than make counteroffers. Mills started the week quoting below last Friday’s high double and triple-digit price reductions and prices proceeded to trade at or decline further from there; for production available for shipment on many items as soon as transportation could be arranged. Mill Cert., sales remain lackluster. Mills started the week quoting at or below last Friday’s levels and prices proceeded to trade in a similar pattern from there, with prompt shipment available on most items in the complex. The inquiry and sales pace of underlayment, siding, concrete form, and other specialty panels varied from item to item. Mills started the week quoting siding flat, while unevenly lowering the prices on the remaining items in the complex, with production available to ship the week of 7/18+/-. ?

Western Fir Panels -: With prices on Western Fir Rated Sheathing closing in on breakeven levels, producers took a page from the Canadian SPF producers’ playbook, and started the week with firmer quotes. That did draw a limited number of buyers back into the marketplace. However, it was only when mills agreed to accept modest counteroffers that a limited number of sales were transacted. Carload volume buyers in the Midwest and Northeast checked on price and availability early in the week, and a limited number of those buyers, in need of replenishment for a late July arrival, did step in, after the mill agreed to the product mix and their counteroffer. The CD Struct I, CC, CC PTS and Mill Cert panel complex started the week with a slightly better tone, but still in search of a price level that would pique buyer interest. Producers started the week quoting the entire sector at or on either side of last Friday’s levels and prices traded in a similar pattern from there, with immediate shipment available on many items. The inquiry and sales pattern in value-added panel markets, remains unchanged from previous weeks. Mills started the week quoting underlayment below last Friday’s levels, while holding the prices of sanded, siding, concrete form, and other specialty panels flat and firm; for production available for shipment the week of 7/18+/-.?

Food for Thought-: ?The daughter, son-in-law, and our favorite oldest and favorite youngest granddaughters (you get the picture) and our new grand puppy are all coming for a visit next week. As a result, Notes will be taking the week of 7/8 off. Notes will return on Friday 7/15. Until we meet again to discuss the lumber and panel markets . . . From my family to yours . . . Wishing you a sane, safe, and relaxing . . .

Happy Canada Day Happy Independence Day