Notes from the Forest-12-27-19 Edition

Ladies and Gentlemen:

With Christmas Eve and Boxing Day in Canada on either side of Christmas day, the number of traders in their offices over the course of the week was limited. With a handful of exceptions, most producers have pushed their production schedules into the weeks of 1/6 – 1/13, or beyond.  As a result, mills need to further reduce their prices and \ or accept modest \ moderate counter offers has all but evaporated.  For the most part office wholesalers are in a similar situation. Buyers’ concerns have moved from their recent purchases not arriving prior to 1/2, to it needs to be here on 1/2 or shortly thereafter, and of course the ever-changing weather pattern and how it can and will impact jobsite activity in the new year.  

Housing & Economic News:

? The U.S. Census Bureau and the Department of Housing and Urban Development jointly reported that the sales of new single-family homes for November were at a SAAR of 719,000. This is 1.3% above the revised October rate of 710,000 and is 16.9% above the November 2018 estimate of 615,000. The SAAR estimate of new houses for sale at the end of November was 323,000. This represents a supply of 5.4 months at the current sales rate.

? Facing a crisis in the Coastal forest products industry, the B.C. government is dropping stumpage fees on Crown land in the Coastal region and delaying previously announced reforms. The B.C. government is substantially cutting provincial stumpage fees on timber from Crown land and revising the pricing formula to make logging more viable. The average stumpage rate on the coast will be $8.82 cents [per cubic meter] versus $18.73 now. The government is also delaying increases to coastal log export charges by six months and relaxing new regulations on the removal of wood waste from logging sites eased.

? According to the November Zillow Real Estate Market Report, annual home value growth in the U.S. has reached its lowest point since January 2013. As the housing market continues its return to historic norms after a red-hot 2017 and 2018. Annual home value growth has now slowed in each of the past 19-months. Fortunately, it has been a gradual slowing and not slamming on the brakes. The drop in year-over-year has not exceeded 0.3% points from one month to the next during the 19-month period.  

CME Lumber Futures –. The CME Lumber Contract for January 2020 will expire at Noon CST, Wednesday 15th January 2020. For the past 4-days of trading (12/20 – 11/26) There was no trading on Wednesday 12/25/19, in observance of Christmas and trading the rest of the week was lite. CME Futures were Up 0-days and Down 4-days. For the past 4-days CME Futures have lost <-$11.00> and are trading above the cash market, ($391.00 MBM) by $15.20 (CME $406.20).  

Lumber Market Briefing:

Overall, traders anticipated a quiet week in trading this holiday shortened week and for the most part their expectations were well met. What activity there was happened on Monday and again on early Thursday morning.   

? Sales in Coastal and Inland Hem Fir \ White Fir were lite this holiday shortened week. Activity this week was really limited to Monday, with some modest activity on Thursday morning. Mills are quoting production scheduled for the weeks of 1/6 – 1/13 and with that they quoted prices at, or modestly above last Friday’s reported levels. Buyers’ interest seemed focused in on the narrow widths. Producers and office wholesalers reported receiving limited inbound phone calls from buyers, but they were typically related to when shipments would be available to them after Thursday 1/2.  Sales of low-grade stock and stud trims held at, or on thin line on either side of last week’s reported levels, on production scheduled for the weeks of 1/6 – 1/13.

? Sales in Eastern and Western No.2 & Btr. SPF started the holiday week with limited action on Monday and there was little to no action after that. Last week’s flurry of activity allowed producers to move their production schedules into the weeks of 1/6 – 1/13, and with that prices were being quoted at, or modestly above last Friday’s reported levels. Buyers’ attention, albeit limited, seemed to be focused on the narrow widths. Sales of low-grade stock and stud trims traded at, or on a narrow line on either side of last week’s reported levels.

? Southern Pine sales started the week experiencing steady follow through from last week’s flurry of activity. Most of this week’s activity took place on Monday, with some moderate follow through on Thursday. Producers are quoting production for the weeks of 1/6 – 1/13, with a handful of items being quoted for the week of 1/20, on Thursday afternoon. Producers started the week quoting modestly \ moderately above last Friday’s reported levels and while trading was lite, those levels held at, or were moved higher through the remainder of the week. Low-grade stock and stud trim sales were flat, but with production schedules extended, mills continued to quote at last week’s levels.  Sales of small squares and timbers remain robust. In the Eastside Zone, sales and production remain in sync and prices were unchanged from last week. In the Westside zone, demand for 4x4 and 4x6 continues to exceed production and producers pushed prices $ 5 - $ 10 MBM higher on 4x4s and   $ 10 - $15 MBM higher on 4x6. 6x6 sales are finally back in sync with production and prices traded at, or $ 5 MBM above last week’s reported levels. Sales of 5/4 x 6 Radius Edge Decking remain slow but steady. Prices in both the Westside and Eastside zone are unchanged from last week’s reported levels. Producers are eagerly waiting for their pressure treated buyers to return from their holiday and resume purchasing for upcoming winter buys.

? Green Doug Fir sales were quiet again this week. However, producers with production schedules on Construction grades, as well as low-grade stock and stud trims into the weeks of 1/6, to as far out as 1/20, on selected items, held prices firm and waited for buyers to return from their holiday vacation time and for trading to resume in earnest. Mills were quick to remind buyers, that recent mill closures and curtailed production levels at other mills has significantly lowered the availability of Green Doug Fir items.

Panel Market Briefing:

Traders expected slow to moderate sales in the plywood and OSB markets this Christmas holiday shortened week. Buyers got down to business first thing on Monday, and many had wrapped up their week, or the month, or year prior to leaving that afternoon. 

? OSB sales seemed a bit better.  Producers are quoting production scheduled for the weeks of 1/6 – 1/13. Extended production schedules allowed producers to quote at, or a few dollars above last Friday’s reported levels.  Transportation issues are common for this time of the year and mills are reporting a death of available empty railcars or trucks to load. Mills are hoping that this issue will improve after the start of the New Year.

? Southern Pine Rated Sheathing sales started the holiday shortened week with limited energy. The markets’ busiest day was Monday, as buyers focused on covering needs through the early weeks of January, before they headed off on their end of the year holiday time. There was some residual activity on Thursday, as well, with a handful of buyers, checking on delivery, not prior to 1/2, but wondering how soon after that they could expect shipment on previously placed orders. Producers are quoting production for the weeks of 1/6 – 1/13, and prices traded at, or on a narrow line on either side of last Friday’s reported levels. Buyers noted a dearth of prompt shipments available from the mills, but found that office wholesalers and local 2-step distribution had sufficient supply to cover any suddenly arising needs. The sales of value-added panels – underlayment, siding, concrete form, and other specialty panels remain seasonally slow and prices continue to trade on a narrow line on either side of previously established levels, for production scheduled for the week of 1/6 – 1/13.

? Western Fir Rated Sheathing sales started the holiday shortened week on the quiet side. West Coast truckload buyers were active in the market on Monday, as they covered early January needs, with the caveat remaining ‘no delivery prior to 1/2’ and checked on previously placed orders. There was also some limited action on Thursday as well.  A handful of producers are still quoting production scheduled for the week of 12/30. However, a majority of mills have been able to move their production schedules into the weeks of 1/6 – 1/13. Prices are being quoted at, or on a thin line on either side of last week’s reported levels. The sales of underlayment, siding, concrete form, and other specialty panels remain seasonally slow and prices continue to trade on a narrow line on either side of previously established levels, for production scheduled for the week of 1/6 – 1/13. 

Happy New Year . . .