February 11, 2022

CORRECTIONREJECTED! The bears that entered the market last week were shocked to step in some bullsh_t this week, as the tone quickly shifted. The previous week’s late winter retreat promptly reversed course, as buyers were the ones that seemingly came out of hibernation to the surprise of many. So, with winter still upon us and turmoil rising on the other side of the world, the question to ask yourself is: “Did any of this impact the place I like to: ‘The Wonderful World of Wood?” Great question! Tune in to find out. Enjoy..

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Well, that was quick! Softness experienced the previous week brought the buyers out of the woodwork, as the correction was short-lived. Moreover, strong demand for the upcoming spring orders trumped any sense that a late winter slow-down in the market would impact consumption. As a result, 2×4 2/Btr KDHF jumped by nearly 4-1/2%, a dramatic reversal compared to the previous week’s 3-1/2% dip. Over the past month, 2×4 2/Btr KDHF has posted gains totaling 4% while it stands more than 25-1/2% above its mid-February 2021 level.

The market’s direction shift transcended all products as buyers panicked as March came into view. For the week, 2×6 2/Btr KDHF rose more than 3%, confirming the shifting sentiment again, as it reversed course from the previous week’s 3-3/4% stumble. Looking back over our shoulder, we find that 2×6 2/Btr KDHF is up over 4-3/4% over the past 4-weeks while positioned upwards of 19-1/4% higher than the price point posted exactly one year ago.

The market’s shifting mood touched the wide stock as font colors turned like autumn leaves. As a result, 2×10 2/Btr KDHF did an about-face as it came close to recouping all of the previous week’s losses, gaining 2-1/3% for the week, flip-flopping direction compared to last week’s 2-2/3% losing effort. For the month, 2×10 2/Btr KDHF finishes up more than 3-1/4% and arrives at the middle of the month more than 30-3/4% higher than it stood in mid-February 2021 level.

2×12 2/Btr KDHF followed the market’s shiftiness, as it too saw buyer’s interest increase and its font color flip for the second week in a row. As Valentine’s Day approached 2×12 2/Btr KDHF bounced back from the previous week’s weakness as it inched higher by 1/2%, a reversal compared to last week’s 2-3/4% losing effort. As a result, 2×12 2/Btr KDHF closes out the previous 4-weeks lower by 1/2% compared to its mid-January 2021 mark while finding itself north of 17-1/3% above its trading level from one year ago.

The cautious pause experienced last week remained as Green DF Timbers continued applying the brakes as cupid began making his rounds. Once the week was said and done, Green DF Timbers coasted into Friday unchanged, a virtual copy-and-paste of the previous week’s inactivity. Over the past 4-week’s, Green DF Timbers have seen activity north of 13-3/4% while remaining positioned more than 5% above its mid-February 2021 level from one year ago.

The headaches continue. The brief pause experienced last week is now but a memory, as buyers opened their PO books to add to inventories amidst the market’s short-lived recovery. As a result, 2×4 Western S-P-F 1650fb MSR closed out the week higher by 2-1/2%, as it applied pressure to the accelerator compared to the previous week’s more cautious and stagnant unchanged effort. Over the past month, 2×4 Western S-P-F 1650fb MSR has pressed higher by more than 6-2/3%, while it stands more than 26-3/4% above its mid-February 2021 level.

The coal mine canaries scattered as pricing took on more bullish sentiment as the market reversed course. Continuing strong demand stifled any hopes of further softness as slim supplies tilted the pendulum back into the producer’s direction. For the week, 2x4x8′ PET KDHF Solid Studs surged by more than 6-1/3%, as it dramatically reversed course, recouping all of last week’s 5-2/3% drop. After experiencing the Jeckle and Hyde transformation, 2x4x8′ PET KDHF Solid Studs find themselves 5% higher over the past month, as they now stand roughly 43-1/2% above their mid-February 2021 trading level.

Similar to its shorter counterpart 2x4x9′ PET KDHF Solid Sawn Studs found a resurgence in strength after a very short-lived retreat. 2x4x9′ PET KDHF Solid Sawn Studs jumped nearly 7%, as it nearly recouped the entirety of the previous week’s 8% losing effort. For the month, 2x4x9′ PET KDHF Solid Sawn Studs find themselves even-seven, mirroring levels from mid-January while standing more than 17-2/3% above their price posted exactly one year ago.

So much for a late-year hibernation effort! The softness seen last week from 4x8x1/2” CDX Plywood quickly vanished as buyers flooded the phone lines with purchase inquiries. The price disparity between plywood and OSB was the most likely culprit, as significant discounts appeared amidst the OSB market insanity. Producers scrambled to keep up with inquiries, as several mills opted to go “off-market” amid the buying frenzy. As a result, 4x8x1/2” CDX Plywood jumped by more than 4%, a swift reversal compared to last week’s 1% eroding effort. As we arrive a the middle of February, 4x8x1/2” CDX Plywood now stands upwards of  5-1/4% higher over the past 4-weeks, while it is positioned just nearly 25-1/4% above its price from one year ago.

A similar pattern was found in the plywood floor sheathing category, as interest and price momentum gained steam. For the week, 4x8x3/4″ T&G UDLX Plywood finished with gains of 2-1/4%, accelerating from the previous week’s 1/3% effort. As a result, year-on-year, 4x8x3/4” T&G UDLX Plywood finds itself standing nearly 24-1/2% above its trading price posted from this time in February 2021 while remaining more than 3-1/2% higher over the past 4-weeks.

NOWHERE TO BE FOUND! Panicked buyers scrambled to find product amidst a desert of availability as shortages continued. Famine-like conditions left many under-bought and unable to meet previous contracted commitments. Amid the panic, the “Commodity King” flexed its muscle as pricing in the secondary wholesale market rose to unprecedented levels, with premiums of 30+% being reported. For the week, mill pricing of 4x8x7/16” OSB jumped by upwards of 8-3/4%, easing slightly compared to the previous week’s 9-1/2% rise. Nevertheless, the king ends the past 4-weeks more than 51-1/2% higher and now sits 37-3/4% above its mark from precisely one year ago.

For the third week, surging OSB prices helped expand the OSB to Plywood premium. As a result, we close out the week with 7/16″ OSB vs. 1/2″ CDX at a PREMIUM of 7.8%, a doubling of the previous week’s 3.1% mark.

BEAT HEAD AGAINST WALL HERE! The frustration mounts as the OSB floor sheathing availability struggles continue. Regardless of region, the available product could not meet strong demand as pricing continued escalating. Logistics issues continued as torture best describes what buyers went through this week. 4x8x23/32” T&G OSB popped by more than 8%, tagging onto the previous week’s 9-1/2% upsurge. The past month has seen 4x8x23/32″ T&G OSB gain more than 36-1/2% while leaving it 36% above its price point from precisely one year ago.

PREMIUMS ABOUND! The inconsistency of the price volatility of plywood and OSB helped elevate the PREMIUM of OSB vs. plywood, as it finished the week at 5.7% compared to last week’s even-steven mark.

Hopes of improved weather and a robust spring build season were enough to bring buyers back into the fold. As the second week of February came and went, my composite managed a respectable gain of $59.3mbf, rising a measly 4.95%, as it pushed north of the $1250mbf mark, finishing at $1256.4mbf, its highest level since early July 2021.

  A special thanks to the team at IWP (International Wood Products) for their continued sponsorship in 2022. Their support (along with donations from readers like YOU) help to keep Shoe’s Lumber Report going strong. THANK YOU! Check out IWP’S line up of TREX decking by clicking the hyperlinked banner below to visit their website.

TWO AND DONE! It seems as if a pair of weeks was enough, as 2×4 2/Btr Kiln Dried Spruce-Pine-Fir Western Mill shook off its recent softening trend. An about-face in lumber futures strength was the catalyst that sparked the resurgence, as sellers quickly turned into buyers. As a result, 2×4 2&Btr Kiln Dried Spruce-Pine-Fir Western Mill had its world rocked again, reversing course to surge more than 8%, a 180-degree shift from the previous week’s 1-2/3% drop. Over the past month, we have seen 2×4 2&Btr Kiln Dried Spruce-Pine-Fir Western Mill jump higher by more than 6-1/4% as it stands more than 30% above its price point from precisely one year ago.

The spot-month of March had a follow through the week, as the whiplash experienced last week continued. First, four limit-up days were posted, as trading Monday through Thursday was solidly higher. Then Friday arrived. The strong upward trend looked to continue, as a robust limit-up day began, only to finish with a limit-down day amidst the turmoil between Russia and Ukraine muted the tone. The March 2022 contract closed out the topsy-turvey week with a 4.39% discount, as it eroded into the previous week’s 9.33% mark.

The week’s solid price rally helped brighten the spring outlook, as the previous discounts received a bit more trimming. The May 2022 contract’s momentum pressed higher, ending the week with a 10.14% discount, compared to the prior week’s 14.35% discounted mark. The July 2022 futures to cash discount softened ever so slightly, finishing at 16.39% versus the previous week’s 17.16% mark. The shift was also seen with the September 2022 futures to cash mark, as it ended with a 19.33% discount compared to last week’s more sizeable 24.15% mark. The November 2022 contract also experienced a retraction, closing the week with a 19.82% discount, slightly carving into the previous week’s 26.78% discounted mark. Looking to next year, the January 2023 contract wrapped up the week with a futures-to-cash discount of 19.82%, compared to the previous week’s 26.78% mark. And finally, the March 2023 contract left us with a 20.29% discount, lower than last week’s 27.29% level. Until next week… Shoe out!

Jim Schumacher
Shoe’s Lumber Report
(425) 219-6118