October 7, 2022
ONE SCARY BEAR MARKET! The first week of October provided some tremendous roars in both directions as the financial markets buttoned up the week on a more bearish tone that rocked the nerves of everyone. So how did the bearish financial market impact the lumber market? Great question. To find that answer, just dive into the place I like to call: ‘The Wonderful World of Wood”. Enjoy…
Indigestion hampered traders this week, as the combined economic turmoil and pessimistic housing future caused hesitancy among traders. As a result, 2×4 2/Btr KDHF reversed course from the previous week’s slight gain, as it dipped more than 3-1/2%, after creeping higher ¾% last week. Over the past month, 2×4 2/Btr KDHF has lost more than 5% while standing 1% below its early-October 2021 level.
2×6 2/Btr KDHF fared much better, as mediocre demand kept pricing in check. 2×6 2/Btr KDHF buttoned up the week unchanged, slowing from the small perk of 2-1/4% last week. As a result, 2×6 2/Btr KDHF has remained unchanged over the past 4 weeks while remaining more than 1% above its price point one year ago.
As the first week of October arrived, 2×10 2/Btr KDHF found itself on the retreat, as weak interest forced producer’s hands, as prices closed out the week down 2-1/2% after pausing for the previous week’s more than unchanged effort. Over the past month, 2×10 2/Btr KDHF is now lower by nearly 5% from where it was 4 weeks ago while standing roughly 17.3% above its early-October 2021 level.
For the second week, 2×12 2/Btr KDHF managed to escape unchanged, marking its second week of unchanged inaction. Peering back over the past month, 2×12 2/Btr KDHF comes in nearly 2% higher compared to its early-September levels while positioned 2-3/4% below its trading level posted precisely one year ago.
Green DF Timbers succumbed to the market’s pessimistic tone, as they dipped by more than ½%, after coming off of the previous week’s unchanged effort. However, over the past 4 weeks, Green DF Timbers are even-steven while still standing a solid 42% above their late-September 2021 levels.
Over the last few weeks, we have seen a rinse-and-repeat, as 2×4 Western S-P-F 1650fb MSR remains in a mundane pattern, closing out the previous four weeks unchanged. As a result, 2×4 Western S-P-F 1650fb MSR enters Q4 unchanged over the past month, nearly 16-3/4% below its early-October 2021 level.
My canary in the coal mine continued its efforts to provide a hint of what was to come. However, a lackluster desire from buyers put pressure on the producer side, allowing 2x4x8′ PET KDHF Solid Studs reeled last week, dropping 4-1/2% after escaping the previous week unchanged. As we end September, 2x4x8 PET KDHF Solid Sawn Studs now stand 7-2/3% lower over the past 4 weeks while standing 4-1/2% below their late-September 2021 trading levels.
2x4x9′ PET KDHF Solid Sawn Studs followed a parallel path to their shorter cousin’s effort as they, too, lost ground. 2x4x9′ PET KDHF Solid Sawn Studs dropped more than 3-3/4% by week’s end, after the previous week’s unchanged pause. Over the past month, 2x4x9′ PET KDHF Solid Sawn Studs have dipped more than 7-1/4% compared to their early-September levels while positioned more than 12% below their price one year ago.
1/2” CDX plywood succumbed to the market woes, albeit at a lesser pace than the previous week. As a result, 4x8x1/2” CDX Plywood fell by 3/4%, reducing its descent from last week’s 4-1/4% drop. Over the past month, 4x8x1/2” CDX Plywood finds itself down over 15% while remaining positioned more than 8-1/3% above its price one year ago.
4x8x3/4″ T&G UDLX Plywood continued lacking any life, as sluggishness continued. As a result, 4x8x3/4″ T&G UDLX Plywood nudged lower more than 3/4%, as it continued eroding after the previous week’s more than 4-1/3% falter. 4x8x3/4” T&G UDLX Plywood is now lower by nearly 9-1/2% over the past month while positioned roughly 10-1/4% above its early-October 2021 level.
BORING, BORING, BORING. The week offered up little as a near-term digestion pattern formed. 4x8x7/16” OSB reacted in a lackluster fashion to hurricane demand as supplies far-out-weighed as the demand. For the week, the “Commodity King” was stagnant, as 4x8x7/16” OSB ended the week unchanged, mirroring the previous week’s dip of unchanged. The king closed the past month down more than 8-1/3%, as it is now more than 31-1/3% under its price point from precisely one year ago.
Continued sluggishness in the panel sector helped keep the 7/16″ OSB vs. 1/2″ CDX DISCOUNT, ending the week at 41.1% versus last week’s 41.6% mark.
4x8x23/32” T&G OSB also hung tough this week, wrapping it up unchanged, pausing matching last week’s unchanged effort. Over the past month, we have seen 4x8x23/32″ T&G OSB drift lower 5-1/4% while leaving it nearly 28-1/4% under its price point from one year ago.
With nothing exciting occurring in the floor sheathing panel sector, the gap between plywood and Oriented Strand Board finished the week at a 46.6% DISCOUNT, a touch lower than last week’s 47.1% mark.
A lack of buyer interest impacted 2×4 2&Btr Kiln Dried Spruce-Pine-Fir Western Mill this week, as pricing dumped upwards of 9-1/2%, adding momentum behind the previous week’s 6% decline. The past month has not been kind-hearted to the 2×4 2&Btr Kiln Dried Spruce-Pine-Fir Western Mill number, as it has now fallen more than 13%, while it stands upwards of 22-1/2% below its price point posted precisely one year ago.
The current front month of November 2022 was provided a bit of relief with the sluggish cash market, as it closed Friday with a 3.63% premium and reversed course compared to the previous week’s 10.57% discounted mark, as the bottom bouncing is upon us.
Looking out to next year, January 2023 turned on a dime with the weakness in cash, ending the week with a 3.74% premium, jumping higher compared to last week’s 6.34% mark. Likewise, March 2023 declined with the market, closing at a 10.12% premium, surging higher from last week’s 3.43% mark. Finally, the May 2023 contract followed the bearish tone over the last few weeks, concluding this week at a 12.21% premium, moving lower from last week’s 1.2% discounted mark.