Notes from the Forest 11-11-22 Edition

Ladies and Gentlemen:?

Lumber and panel market distractions during the week contributed to minimal sales in both markets. Some producers hoped to lure buyers back into the marketplace with lower prices, but others just held prices firm and listened to and accepted counteroffers on items they wanted \ needed to move. Buyers continue to limit their purchases to immediate needs. Some buyers turned to local 2-step distribution for units out of warehouse, whiles others looked to substitute items (higher grade or long length) they already had in inventory. Rain along the West Coast, an early season snowstorm and blizzard conditions from the Rockies east to Minnesota, and a late season hurricane making landfall in Florida and moving up along the eastern seaboard all helped to keep jobsite activity in check. On top of that many traders have traveled to Phoenix to attend the NAWLA Traders Market and were away from their desks. ?

The U.S. Bureau of Labor Statistics on Thursday (11-10-22) reported that the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4% in October, on a seasonally adjusted basis. The exact same size increase as in September. This after rising 0.1% in August, being unchanged in July, but rising 1.3% in June, 1.0% in May, 0.3% in April, 1.2% in March, 0.8% in February and 0.5% in January. Over the past 12 months, the all-item index has increased 7.7% before seasonal adjustment. The October increase was the smallest 12-month increase since the period ending in January 2022. The all items less food and energy for the 12-month period ending in October rose 6.3%, During the same time period the energy index increased 17.6%, and the food index increased 10.9%. The BLS notes that all of these increases were smaller than for the period ending in September 2022. ?

Spruce Markets -: ?Buyers of Eastern and Western No.2 & Btr., SPF did their best to distance themselves from the marketplace during the week. This as they continued to weigh the outcome of the U.S. mid-term elections, and deal with the unrelenting economic headwinds. The few buyers in the marketplace turned to office wholesalers for highly mixed truckloads or purchased units of local 2-step distribution to keep their exposure to the uncertainty of markets limited. Mills started the week quoting construction grade at or below last Friday’s levels, and that pattern persisted throughout the week; for production available for shipment the week of 11/21+/-. Low-grade sales are under the same stress as construction grade products. Mills started the week quoting low-grade modestly below last Friday’s levels and prices traded in a similar pattern from there, for shipment available the week of 11/21+/-. The slower sales pattern has also enveloped the stud trim markets. Mills started the week quoting SPF stud trims below last Friday’s levels and prices inched lower from there, for shipment available the week of 11/21+/-.?

CME Lumber Futures –: The CME Lumber Future Contract for November will expire on Tuesday, 11-15-2022 at 12:00 Noon CST. For the past 5 days (11/4 – 11/10) CME Futures were unchanged 2-days, up 2-days and down 1- day. For the past 5 days CME Futures have gained $25.00 and are trading above the Midweek Cash Market of $445, by $15.00, CME Futures at $460.00. One Year Ago, (11-10-21) CME Futures closed at $586.50.?

Hem\ White Fir -: ?The K.D. Hem \ White Fir Std. & Btr., and No. 2 & Btr., marketplace quieted further during the week. With additional dimensional production coming back online in both Green and K.D., buyers’ concern about having enough inventory to meet their tract, multifamily and mixed commercial builders’ demands have quickly faded. Mills started the week quoting construction grade at or on either side of last Friday’s levels, but there was more downward motion than flat to higher, and prices traded in a similar pattern from there; for production available for shipment the week of 11/21+/-. Demand for low-grade slipped further. Mills started the week quoting low-grade at or below last Friday’s levels and prices traded at or edged lower from there; for shipment, the week of 11/21+/-. Stud trim sales continued to slow during the week. Mills started the week quoting at or below last Friday’s levels and encouraged buyers to make ‘reasonable’ counteroffers or provide them with feedback, for shipment available the week of 11/21+/-. ?

Green Doug Fir -: ?Encouraged by the prospect of increased production of Green Doug Fir (GDF) Std. & Btr., and No.2 & Btr., GDF dimensional lumber buyers have quickly reverted to purchasing hand to mouth, while at the same time digesting recent purchases of alternative species made to cover replenishment during the now settled labor dispute. Mills started the week quoting GDF construction grade narrow widths below last Friday’s levels, while holding wider widths steady and prices traded in a similar pattern from there; for production available for shipment the week of 11/21+/-. Demand for low-grade continued to cool during the week. Mills started the week quoting low-grade at or on either side of last Friday’s levels and prices proceeded to hover close to those levels from there, for shipment available the week of 11/21+/-. Buyers’ interest in GDF studs was limited, and competitively prices KD stock only made their sales more difficult. Mills started the week quoting GDF stud trims at or below last Friday’s levels and prices traded in a comparable pattern from there, for shipment available the week of 11/21+/-. ?

Cedar Lumber -: ?With the end of the year quickly approaching, buyers’ interest in the Western Red Cedar (WRC) lumber market remains limited to the replenishment of immediate needs and little else. There was, however, a noticeable uptick in buyers inquiring about availability and potential programs for 2023. This in turn gave mills a glimmer of hope for improved sales once the new year starts. Mills continue to deal with an excess of boards and narrow width dimensional lumber. On those two items they were willing to discount. The tight supply and steady demand for decking, fencing, siding, timbers, and wider width dimensional lumber had mills holding prices on those items flat but firm. The NAWLA Traders Market is this week in Phoenix and buyers and traders were anxious to meet with one another and get 2023 off to a positive start. ?

Shake & Shingles -: ?Several Western Red Cedar (WRC) Shake and Shingle producers took matters into their own hands late last week. Needing to move excess inventory they offered steep discounts to known volume buyers and they were able to sell large amounts of inventory. Once that was accomplished those same mills returned prices back to previously higher quoted levels. The WRC Shake and Shingle market started the week with buyers wondering about last week’s turmoil and they are once again approaching the market with deep concern about its overall health. Mills started the week quoting at or on either side of last Friday’s levels, with shipment available anywhere from prompt to the week of 11/21+/-.?

Southern Pine -: ?The Southern Pine No.1 and No.2-dimensional lumber markets continue to tighten. As pending Thanksgiving downtime approaches and limited availability of several key items kept buyers active in the marketplace. Buyers from all sides of the supply chain participated in purchasing limited, but much needed replenishment. Buyers for truss manufacturers and treaters were particularly active, especially those who service the Southeast and Texas. Mills started the week quoting the entire complex at or above last Friday’s levels and prices hovered at or trended higher from there; for production available for shipment the week of 11/21+/-. High-grade sales remain robust. Constrained availability and steady demand allowed mills to raise high-grade prices and order files extend into the week of 12/12+/-. Low-grade sales have found a trading level, and supply and demand are almost in sync. Mills started the week quoting low-grade at or on modestly on either side of last Friday’s levels and prices hovered close to those levels from there, for shipment the week of 11/21+/-. Stud trim sales continue to fade. In the hopes of being able to compete with other species, mills started the week quoting stud trims below last Friday’s levels and prices traded at or declined further from there, for shipment the week of 11/21+/-. The trading pattern in small squares and timbers remains unchanged from previous weeks. Mills continue to nudge 4x6 prices higher, while 4x4 and 6x6 continue to require price concessions to keep production sold. Demand for 5/4 x 6 Standard and Premium Radius Edge Decking continued to slow during the week. Mills started the week quoting R.E.D. at or on either side of last Friday’s levels, for shipment available the week of 11/21+/-. ?

Pressure Treated-: ?Sales of pressure treated lumber, panels and accessories continue to seasonally slow and regionalize. The end of daylight savings time, the sudden arrival of winter in many parts of North America, and the approaching holiday season has DIY’ers attention focused on other indoor projects. Sales to tract and multifamily \ mixed commercial builders remain steady, but even that pace was starting to show signs of seasonal fatigue. As a result, pro dealers continue to keep their inventories lite by design, which in turn continues to keep constant pressure on their treated suppliers to be responsive to their need for prompt shipments. ?

OSB & Veneer Panels Overview –: Trading activity in the OSB and plywood markets remains little changed from previous weeks. Buyers facing year end purchasing restrictions, higher interest rates, coupled with socioeconomic uncertainties for Q1 and Q2 of 2023 continue to play their replenishment strategies close to the vest. OSB producers have almost brought production and demand into equilibrium. While plywood mills continue to struggle to get that feat accomplished. Panel prices this week traded at or modestly below last Friday’s levels. However, buyers did note that the size of counteroffers a plywood mill would accept continued to shrink during the week, and OSB mills were not interested in even listening. Mills are quoting production for the week of 11/21+/-. Prompt loadings were oft times available but at a premium. ?

OSB -: ?Supply and demand in the OSB markets remain in close alignment, as they have for the past 8+ weeks. Which is odd for a market known for its wild swings. The lack of open market panels and buyers with contracts continuing to cover their immediate needs by adding to their current contracts continues to underpin the market’s pricing. Buyers without contracts searched through the mill, office wholesale and secondary markets looking for coverage, and anything found that could ship close to promptly always came with a premium price. Buyers who are considering lowering the number of contracts or completing dropping contracts all together in 2023, are continuing to examine and reexamine their pending decision. Mills are quoting production available for shipment the week of 11/28+/-. Weather and job site activity will be the guide cautious buyers will rely on through the remainder of the year. ?

Southern Pine Panels -: Boise Cascade announcement that it was taking all its plywood mills down in the South the week of November 21st, had minimal, if any, impact on the markets. Several buyers noted that the curtailment provided no volume reduction information, and just happened to coincide with both the week of Thanksgiving and the start of deer hunting season in the South. Other buyers wondered what the privately held companies, who do not have to announce such action, might be doing as prices continue to creep lower. Mills started the week quoting sheathing at or modestly below last Friday’s levels and prices traded at or inched lower from there; for production available for shipment the week of 11/21+/-. Mill Cert., sales remain subpar. Mills started the week quoting Mill Cert., at or below last Friday’s levels and prices hovered close to those levels from there, for shipment the week of 11/21+/-. Trading in specialty panels varied from item to item. Mills started the week quoting concrete form and siding at last Friday’s levels, and prices hovered close to those levels from there. Sanded panels were all being quoted at or below last Friday’s levels, while underlayment was being offered at a discount. ?

Western Fir Panels -: ?Western Fir Rated Sheathing plywood producers continue to have production output in excess of current marketplace demand. Buyers remain cautious and are trying to keep their on-ground inventory levels in close alignment with decent but slowing sales. Mills started the week quoting sheathing at or a few dollars below last Friday’s levels and prices traded at or inched lower from there; for production available for shipment the week of 11/21+/-. The CD Struct I, CC, CC PTS and Mill Cert., markets continue to trade in their familiar configuration. Mills started the week quoting the entire complex at or below last Friday’s levels and prices traded in a similar pattern from there; for shipment available the week of 11/21+/-. Sales of value-added panels remain unchanged from previous weeks. Mills started the week quoting concrete form, sanded, and siding at last Friday’s levels and prices held close to those levels, for shipment the week of 11/21+/- Underlayment production continues to overwhelm lackadaisical sales. Mills started the week quoting underlayment below last Friday’s levels and prices sank lower from there, with prompt shipment available. ?

Food for Thought -:?-:?Remembrance Day in Canada and Veterans Day in the U.S., will be celebrated this Friday, 11th Novembre 2022. Back in my youth Veteran’s Day was called Armistice Day; until the name was officially changed by President Eisenhower in 1954. I bring all of this to your attention because it is a holiday that many seem to just skip over as they prepare for the upcoming Thanksgiving, Christmas, and New Year holiday season. ?

This is by no means an attempt to take away from those we honor on Memorial Day. It is, however, important to remember that these men and women, all of which have volunteered to be in the military, deserve our sincerest thanks and deepest appreciation and gratitude for their sacrifice. I wish you a respectful and reflective??

Remembrance Day - - - Veterans Day