Notes from the Forest

Ladies and Gentlemen:

The spring building season shifted into a higher gear this week. CME Lumber Futures for May, July and September are all trading above $1000 MBM+ and have been up five straight days in a row. As a result, buyers have gained greater confidence in the lumber and panel markets not only for the near-term but also the future. Lumber buyers lamented not stepping back into the marketplace 1 – 2 weeks ago. As a result, lumber buyers paid higher prices and are dealing with extending lead times. Panel buyers continue to search through the mill and secondary markets urgently searching for replenishment. A lucky few did find something that could ship within 1 – 3-weeks and gladly paid high double and triple-digits above reported levels for that material. Trucks are suddenly as difficult to source as empty railcars. Freight rates are skyrocketing. This as fresh produce from northern Mexico, Florida and south Texas is just about to be picked, processed and shipped.  Buyers’ frustration and anxiety levels are high.

The National Association of Home Builders (NAHB) /Wells Fargo Housing Market Index (HMI) reports that strong buyer demand pushed builder confidence in the market for newly built single-family home up 1-point, to a reading of 82. Builder confidence topped at a level of 90 in Novembre of 2020. However, any number over 50 indicates that more builders view conditions as good rather than poor. The HMI index gauging current sales conditions increased 1-point to 88 and the gauge charting traffic of prospective buyers posted a 3-point gain to 75. However, the component that measures sales expectations in the next 6-months fell 2-points to 81.

Spruce & Stud Markets -: The inquiry and sales pace of Western and Eastern Canadian SPF Std., & Btr., and No. 2 & Btr., are once again filled with a sense of energy and urgency. Mills started the week quoting double-digits above last Friday’s levels and prices pushed higher from there; for production scheduled for the weeks of 4/26 – 5/12. Traders remain dumbfounded at just how quickly the markets went from quiet to crazy busy. Many buyers are now saying that wish they had stepped back into market 1 – 2 weeks ago, instead of waiting. Sales of low-grade remain steady to strong, as industrial buyers continue to seek additional replenishment for their manufacturing facilities. Mills started the week quoting low-grade double-digits above last Friday’s levels and prices moved higher from there; for production scheduled for the weeks of 4/26 – 5/3+.  Stud trim sales continue to build on the previous weeks’ activity. Mills started the week quoting stud trims double-digits above last week’s levels and prices moved higher from there; for production scheduled for the weeks of 4/26 – 5/3+.

CME Lumber Futures –: The CME Lumber Future Contract for May will expire on Friday May 14th, 2021 at Noon CDT. For the past 5 days, (4/9– 4/15), CME Futures were up 5-days in a row. CME Lumber futures have gained $154.30 for the week and are trading above the Midweek Cash Market $ 1170.00 by $90.70, CME $ 1260.70.

Hem\ White Fir -: The inquiry and sales pace in the Coastal and Inland Std. & Btr. No.2 & Btr., White and Hem-Fir, gained additional momentum as the week progressed. Mills started the week quoting double-digits above last Friday’s levels and prices trekked higher from there; for production scheduled for the week 4/26 – 5/3+. Buyers dealing with increased jobsite demand appeared more willing to purchase at higher prices and extended mill production lead times this week, than in the last 3-weeks. Demand for low-grade remains strong. Mills started the week quoting low-grade above last Friday’s levels and prices moved higher from there; for production scheduled for the week of 4/26+. Demand for stud trims also accelerated throughout the week. Mills started the week quoting double-digits above last Friday’s levels, and prices climbed higher from there; for production scheduled for the week 5/3+. Anything offered for shipment within 2-weeks immediately garnered a significant premium to mill reported levels.

Green Doug Fir -: The inquiry and sales pace of Green Douglas Fir Std. & Btr., & No. 2 & Btr., built on last week’s uptick in activity. Mills started the week quoting above last Friday’s levels and prices moved higher from there; for production scheduled for the weeks of 4/26 – 5/3+. Low-grade sales also accelerated as industrial buyers returned to the marketplace. Mills started the week quoting low-grade at or above last Friday’s levels and prices pushed higher; for production scheduled for the weeks of 4/26 – 5/3+. Thin inventories and increased jobsite activity had Green Doug Fir stud buyers active in the market from the opening minutes of the week. Mills started the week quoting stud trims double-digits above last Friday’s levels and prices trended higher from there; for production scheduled for the week 4/26+. Transportation issues deteriorated further as the week progressed. Railcars have been a problem for over a month, but now truck availability is equally, if not tighter.

 Cedar Lumber -:  The inquiry and sales pace of Western Red Cedar (WRC) boards, fencing, dimension, radius edge decking, siding, pattern stock and timbers remains amazing. Producers continue to report that the availability of WRC logs is extremely limited, expensive when finally sourced, and the quality is not necessarily equal to their price. Increased demand for WRC products left buyers scrambling for coverage. However, with most mills already sold out through Q2 and a good portion of Q3 and large box store retailers adding additional materials (per agreement) onto their contracts there is little, if any additional production that will be available anytime soon. Buyers again pressed producers for updates on previously placed orders and were not particularly satisfied with their continuing mantra of ‘we are working on it.’ As a price guide only, mills started the week quoting at or above last Friday’s levels. Demand for boards and dimensional lumber, small squares and timbers, decking, siding, and fencing remains unrelenting. WRC buyers continue to search for and present alternative species and manmade products to their product needy customers.

Shake & Shingles -: The inquiry and sales pace of Western Red Cedar (WRC) Shake, and Shingles and Eastern White Shingles (EWS) remains steady to strong. Mills started the week quoting at or above last Friday’s reported levels and prices moved higher from there. Supplies tightened further as the week progresses, as demand for Shakes suddenly gained momentum and joined an already undersupplied Shingle market. Mills continue to report that raw materials are a challenge to source and once located are pricey and only of so-so quality. Mills also lamented the start of the Freshet, which will mean even tighter log supply and sharply higher shipping costs. Buyers spent the week chasing after late shipments and were further frustrated when returning to purchase recent quotes only to find higher prices and even less certainty about production lead times. Transportation issues continue to make a bad situation … worse.

Southern Pine Lumber -:  The inquiry and sales pace of Southern Pine No.1 & No.2-dimensional lumber continued to build on last week’s renewed market interest and activity. The spring surge in pressure treated sales, has treated buyers working diligently to keep up with their facilities increased demand for brite feedstock. Mills started the week quoting at, to double-digits above last Friday’s levels and prices moved higher from there; for production scheduled for the weeks of 4/26 – 5/3+. High grade buyers remain active in the marketplace. Truss and modular home manufactures reported another week of solid sales, resulting in the need for additional on ground inventory at their manufacturing sites. Low-grade sales remain strong. Mills started the week quoting low-grade at or above last week’s levels and prices traded higher from there.; for production scheduled for the week of 4/26+. Stud trims sales modestly rebounded this week. Mills started the week quoting studs at last week’s levels and prices traded in a narrow range from there. With treated buyer’s presence increasing in the marketplace, the inquiry and sales pace small square and timber markets picked up momentum as the week progressed. Demand for 6x6 remains stout, and mills started the week quoting 6x6 above last week’s levels. With 4x4 and 4x6 being quoted at or above of last week’s levels for shipment the weeks of 4/26 – 5/3+. The seasonal surge in demand for 5/4 x 6 Radius Edge Decking has finally kicked into gear. Increased demand for both Standard and Premium decking allowed producers to start the week quoting above last Friday’s levels and prices climbed higher from there; for production scheduled for the weeks of 4/26 – 5/3+. Transportation issues in the South abound. Truck rates per mile are soaring, while availability continues to tighten, resulting in late shipments being even further delayed.

Pressure Treated -:  The inquiry and sales pace of pressure treated lumber, panels and specialty items continued to accelerate throughout the week. Large box store retailers are reporting that their anticipated spring DIY building surge is now underway. Box stores have reported strong weekend sales and there was significant follow through during the balance of the week. Leading to box store treated buyers having to order and reordering several times during the week to keep up with increased demand. Pro dealers continued to play catch up with the treated market and as a result needed to replenish frequently to keep up with growing jobsite activity. Treaters are reporting that they have developed production schedules that are in the 1 – 2-week range on several key items. Trucking issues continue to create pinch-points on inbound brite feedstock and outbound finished product. 

OSB & Veneer Panels Overview –:  The demand for OSB and plywood panels remains stellar. Mills started the week quoting above last Friday’s levels; for production scheduled from early May through early July. Again, this week, there were few if any open market panels available. Anything that did appear sold in a matter of minutes, usually to a contract or longtime customer of the mill, and at a price well above reported levels. Plywood mills continue to deal with increasing veneer costs. Resin shortages appear to be easing in the South but remain tight elsewhere. Transportation and production issues remain a headwind and are resulting in additional shipment delays. Downside risk concerns have suddenly resurfaced. With several buyers currently balking at purchasing production scheduled beyond the week 5/3. Again, wanting to see if the markets can sustain their current pace and production schedules before committing to additional replenishment inventory.  

OSB -: The inquiry and sales pace of OSB continues to reflect a market that is experiencing never before seen high demand and extremely low supply. Buyers started the week chasing after late shipments and trying to cajole producers and secondaries to move their pending order(s) to the front of the line. Buyers in desperate need of replenishment have begun reaching out to plywood mills in the hopes of getting some relief. However, reporting limited, to no success. Mills started the week quoting double-digits above last Friday’s levels; for production scheduled for the weeks of 5/10 – 5/24+. Mills did note that currently they are shipping several weeks behind schedule due to production and severe transportation problems. It is being reported that several mills in the South, have spring maintenance scheduled over the next 4 – 6 weeks, which will certainly tighten supply even further. On a positive note, the resin shortage, at least for manufactures in the South, seemed to be easing as more resin production comes back online. Anything that could within 2 – 3 weeks garnered significant premiums to reported mill levels.

Southern Pine Panels -: The inquiry and sales pace in the Southern Pine Rated Sheathing remains stout. Mills started the week quoting double-digits above last Friday’s levels and prices traded higher from there; for production scheduled for the weeks 4/26 – 5/3+. Buyers from all facets of the supply chain, undersupplied and facing increasing seasonal demands from jobsites and panels needed for value-added manufacturing, searched diligently through the mill and secondary markets for additional replenishment. As in the past 6 – 8 weeks they found little, if any, open market panels available. Anything that did suddenly appear sold quickly at high double to triple-digits above reported mill sales levels. Sales of Mill Cert. continue to accelerate, and mills started the week quoting above last Friday’s levels; for production scheduled for the week of 4/26+. The sales of underlayment, sanded, siding, concrete form and other specialty panels remain strong. Producers started the week quoting at or above last Friday’s levels; for production scheduled for the weeks of 4/26 – 5/3+. Truck and rail issues deteriorated further this week.  

Western Fir Panels -: The inquiry and sales pace of Western Fir Rated Sheathing remains animated. Mills started the week quoting double-digits above last Friday’s levels and prices edged higher from there; for production scheduled from mid-May through early July. Limited availability and higher prices for veneer and resin are slowing production and eating away at mill profitability. While production and transportation issues continue to further delay already late shipments. Fir plywood buyers noted that they are now in head-to-head competition for limited finished product with traditional OSB buyers, who are looking at every possible alternative of replenishment to meet pressing jobsite needs. Anything that appeared that could possibly ship within 2 – 3 weeks was being sold at significant premium to reported mill levels. Mill Cert. sales remain active, and producers started the week quoting above last Friday’s levels; for production scheduled for the weeks of 5/3 – 5/10+. Having quickly exhausted their domestic mills production capabilities of CC panels, Canadian buyers returned to the U.S. domestic market once again looking for coverage. Domestic mills started the week quoting CC panels above last Friday’s levels; for production scheduled for mid-June. The sales of value-added panels, underlayment, sanded, siding, concrete form and other specialty panels remain robust. Mills started the week quoting at or above last week’s levels and prices moved higher from there; for production scheduled for the weeks of 5/3 – 5/10+.  

Food for Thought-:     The lost art of lively conversation.

Is it me, or are people talking less and less to each other these days? Oh yes, they send E-Mails, IM’s, Instagram’s and Tweets, (lots and lots of Tweets), they text each other, but as far as talking, they just do not seem to have the time. Back in the stone age, when I wanted something, or needed to know something, and I was in the basement or in the backyard of the house I would shout ‘hey mom’ or ‘hey dad’; and usually I would get an answer; even if it started out with ‘stop shouting and come here and talk to us.’ I have witnessed children who are now using their electronic devices to communicate with their parents and siblings even if they are in the same house, let alone in the very same room, or even sitting across from one another at the dinner table. 

Now there is a place where people seem to love to text and talk on their cell phone and that is in their vehicles. I see more and more of this poor behavior every day. And you can tell those drivers when you see them with their heads down looking at the phone, or with their head tilted to side and the phone pressed against their ear. Here in Tennessee legislation was recently passed to make it mandatory hands free while driving. But we seem to lack the officers of the law to enforce it. 

But I digress. I have been asked how I get my insight on the marketplaces. Well, I certainly look at the lumber reports from all the various sources and their numbers can tell me a lot about what is going on. But I also make phone calls, I talk to mills, I talk to office wholesalers, I talk to local and national 2-step distributors. I listen to what is being said, but I also listen to the tone of the person I am talking to. You can tell when they are upbeat and when things are not quite as they had planned. So, tell me how can you get that from a text message, a Tweet, and Instagram, or an IM?