NOTES FROM THE FOREST 4-8-16 Edition

The inquiry and sales pace of the lumber and panel markets were little changed from last week.  Over the past several weeks large volumes of lumber and panels have been purchased and shipped.  Leaving many buyers in the process of digesting those recent purchases.  However, extended order files, particularly on key lumber items and OSB, are not affording buyers much time to stay on the sidelines.

 The Federal Home Mortgage Corporation, commonly known as Freddie Mac, reported in their monthly Multi-Indicator Market Index (MiMi) that many of the nation's housing markets are getting back to normal heading into the spring home buying season. However, there are pockets of weakness, particularly in the Great Lakes Region, and the South outside, of Florida and Texas. The national MiMi value stands at 82.7, indicating a housing market that's on the outer range of its historic benchmark level of housing activity, and little changed with just a 0.18% improvement from December to January and a three-month improvement of 1.46%. However, on a year-over-year basis, the national MiMi value has improved 7.57%. Since its all-time low in October 2010, the national MiMi has rebounded 40%, but remains significantly off from its high of 121.7.

 Spruce & Stud Markets-:  After 3 solid weeks of inquiry and sales of Eastern and Western SPF Std. &Btr., and No. 2 Btr., the markets slowed, as buyers digested recent purchases. Mills kept upward pressure on 2x4 and 2x6 pricing and successfully sold at those higher levels; while holding 2x8 and wider close to last week’s price levels.  Mills are quoting shipment for 2 weeks or sooner.  Buyers in need of quicker shipping inventory turned to office wholesalers, or mill owned reload centers and usually found what they needed, priced at a dollar or three on either side of last Friday’s reported levels.  Sales of low grade stock also cooled, but mills are still in the process of playing catch-up on previously placed orders and prices held steady. Sales and production of stud trims were in sync and prices remain unchanged. With CME Lumber Futures trending down since last Friday, and only moving to the positive side on Wednesday, buyers had another reason to slow their purchasing. 

 Hem \ White Fir -:  The inquiry and sales pace of Coastal and Inland Hem \ White Fir remain quiet but steady.  Mills have order files that are 2 weeks or sooner. Pricing was flat to modestly higher, depending on the species and region of production. Again, the exception this week was Hem-Fir Redding, where prices were double digits higher at midweek, and continued to climb from there.  As sales of WSPF low grade cooled, so has the demand for alternative products; nevertheless, pricing was flat to a few dollars higher.  Demand for stud trims was also hit or miss, and pricing was unchanged to a few dollars higher.

 Green Doug Fir -: Inquiry and sales of Green Doug Fir Std., & Btr., and No. 2 & Btr., slowed as buyers digested recent purchases.  Mills offering sheets this week suddenly had additional prompt shipping inventory available. Many of those items have been loaded on railcars heading for Chicago for furtherance, and mills worked diligently to find interested buyers; and they did not let modest counter offers (usually $ 5 MBM or less) keep them from taking a PO.  As lower prices on 2x4, 2x10 and 2x12 were reported buyers took another step back from the markets. Demand for low grade and stud trims are in sync with current production levels.

 Cedar Lumber -:  Inquiry and sales of Western Red Cedar (WRC) boards, fencing, dimension, radius edge decking, bevel siding, timbers and pattern stock all gained momentum, after last week’s brief lull. Even areas that have and are experiencing late winter \ early spring snow fall have not slowed their purchasing.  Mills continue to field calls from buyers who were serviced by the recently closed WRC producers. Beyond empathizing with their situation, there was little they could do to help the buyer on the phone as far as taking an order or even putting them on a waiting list.  The price, availability and quality of logs remains an ongoing issue with WRC producers. Pricing is holding steady on some items, but mills have pushed prices higher on key items such as, bevel, channel, T&G siding, S1S2e boards, decking, rough sawn dimensional lumber and timbers; and of course anything related to fencing.  Depending on the specific item mill order files range from late April, to as far out as early July.  With the Canadian dollar gaining strength against the U.S. Dollar, demand for price concessions based on the rate of exchange have quieted.

 Shake & Shingles -:  The inquiry and sales pace of Western Red Cedar Shake and Shingle remains strong.  Mills continue to have issues with the price they are paying for logs and the yield those logs are producing.  Because of that mills hesitated to offer quotes or even take orders priced time of shipment for anything beyond end of May shipment.  Prices remain in an upward tilt, as supply is still not able to keep pace with demand. Inquiry and sales pressure are greater for Shingles than Shakes.

Southern Pine Lumber -:  Inquiry and sales, the Southern Pine No. 1 & No. 2 dimensional lumber continue to moderate.  Demand for 2x4 remains strong and prices edged higher.  2x6 and 2x8 production has increased to the point that supply is outpacing demand.  Mills in the Westside zone reacted first, offering modest discounts on those 2 widths, while other zones held prices steady and listened to counter offer on an order by order basis.  Demand for 2x10 and 2x12 continues to outpace mill production and prices were up double digits, again, at midweek and moved higher as the week progressed.  The same lack of large diameter logs that is limiting production of wider width construction grade, continues to negatively impact the production of high grade – D.S.S., S.S. and MSR. Demand for low grade picked up modestly over the course of the week and pricing was flat to a few dollars higher. Stud trim production is in sync with demand and prices were unchanged from last Friday. Demand for small squares and timbers remain seasonally strong. 4x4 remains the star of the show but 4x6 and 6x6 are not trailing far behind, and prices moved higher again this week.   Demand for 5/4 x 6 Radius Edge Decking continues to build, as treated season moves into high gear.  Standard Radius Edge Decking pricing continues to push higher. Increased demand for Premium Radius Edge Decking have prices on the move higher as well.       

 Pressure Treated -: ‘It’s the most wonderful time of the year’, would be an accurate description of the pressure treated lumber, panels and accessories markets. April has picked up where one of the strongest March sales month in recent memory left off.  Purchasing is coming from all sectors of the market, pro dealers, large box retailers and garden and nursery stores.  Pressure treaters are reporting that they are now carrying an order file on several key items, which has caught some buyers by surprise.  Pricing on brite stock remains in an upward tilt, although a few Southern Pine dimensional items have showed some signs of correction.  Treaters in the South, without their own fleet of trucks, are reporting that trucking is quickly becoming an issue.  

OSB & Veneer Panels Overview -:  The OSB and veneer panel markets have moved in different directions.  The pace of OSB inquiry and sales are accelerating and order files have moved as far out as the week of 5/2 at selected producers.  Sales of plywood have slowed a notch, and order files are next week, to at best the week of 4/18, with prices flat to modestly higher.

 OSB -:  Inquiry and sales of OSB continue to gain momentum, even in areas where several Alberta Clippers during the week dropped moderate amounts of snow. Prices moved higher in all regions and mill order files range from late next week, to as far out as the week of 5/2.  Office wholesalers have contract ownership that can ship before many mill offerings; and they are selling this stock at a few dollars above quoted mill levels.  Mills in the South continue to report having difficulty in sourcing trucks, with delays creeping into the 4 – 7-day range, for locations where return trips are less available.

 Southern Pine Panels -: Inquiry and sales of Southern Pine Rated Sheathing continue to lag the levels of early to mid- March.   Mills are quoting shipment for next week, with a few producers opening up the week of 4/18 late in the week.  Nevertheless, mills continue to hold pricing at previously established levels, and hope they can do so until the lull in purchasing passes.  Office wholesalers have been noticeably absent from the market, content to sell their weekly contract ownership and then work the market back to back.  Sellers of imported panels from Brazil and Chile continue to work through their latest deliveries and are in the process of pre-selling the next scheduled shipments; and at prices below domestic mill replacement levels. Producers are reporting that Mill Certified sales are gaining momentum and inventory levels at the mill are finally starting to shrink. Sales of underlayment, sanded, siding, concrete form and other specialty panels held steady, as did pricing.  Mills shipping managers continue to report that truck availability is shrinking and shipment delay to certain areas is growing.

 Western Fir Panels -:  Inquiry and sales of Western Fir Rated Sheathing were unable to match last week’s accelerated pace.  Mill order files have moved into the week of 4/18, however, some straight thickness loadings became available late in the week, which could ship next week. Mills bumped prices modestly higher and while there was limited buyer pushback, there were also limited sales at the higher levels. Truckload sales along the West Coast continue to dominate the market; with Midwest and Northeast carload buyers digesting recent purchases and noticeably missing this week.  Sales of underlayment, sanded, siding, concrete form and other specialty panels held steady, and pricing was flat to modestly higher depending on the specific item.