February 18, 2022

IT LOOK’S LIKE THE BEAR GOT BULLED OVER! A bit of salt was poured onto the open wound this week if the previous week’s bait and switch effort were not enough. How so, you ask? Well, two significant Canadian lumber producers announced curtailments amidst this year’s challenges, which sent the market into a tizzy. That is not what the doctor ordered, as builders and traders continue reeling from the pain of yet another runaway winter market. So without further adieu, let’s cut to the chase and dive right into the place I like to: ‘The Wonderful World of Wood.” Enjoy..

Once again, the bears stepped aside as the running of the bulls continued. A few weeks ago, the brief glimpse of softness experienced is now just memory, as the market marched higher. Logistics issues persisted as significant delivery delays continued to exasperate traders. As a result, 2×4 2/Btr KDHF rose by nearly 4%, a touch under the previous week’s 4-1/2% effort. The past month has seen 2×4 2/Btr KDHF post gains totaling north of 5%, while it stands nearly 28-1/2% above its mid-February 2021 level.

The market’s bullishness invaded all items, as buyers hoping for a short-term correction succumbed to the near-term reality. The absence of bears propelled 2×6 2/Btr KDHF higher by more than 5%, gaining steam off the previous week’s 3% jump. Looking back, we see that 2×6 2/Btr KDHF is up nearly 4-1/4% over the past 4-weeks while positioned 22-1/4% below its price point posted exactly one year ago.

The market’s upward momentum could not be denied, as wide dimensional stock items joined in on the party. As a result, 2×10 2/Btr KDHF posted gains totaling more than 3-1/2% for the week, padding last week’s 2-1/3% effort. For the month, 2×10 2/Btr KDHF finishes up nearly 3-1/4% and crosses the middle of February more than 23-1/3% higher than it stood in mid-February 2021 level.

2×12 2/Btr KDHF followed the market’s upwards path, as buyers flocked to supplement inventory as spring approached. For the week, 2×12 2/Btr KDHF increased its upwards velocity, adding 2-3/4% during the week, a sizeable gain compared to last week’s 1/2% improving effort. As a result, 2×12 2/Btr KDHF closes out the previous 4-weeks higher by more than 1/2% than its mid-January 2021 mark while finding itself upwards of 15% above its trading level from one year ago.

Turning our eyes to Green DF Timbers, we find that pricing followed the market rising tide, as they too ended the week higher. Once the week was said and done, Green DF Timbers gained nearly 2-1/2%, as they shifted out of park after last week’s unchanged effort. Over the past 4-week’s, Green DF Timbers have seen activity north of 7-2/3% while remaining positioned more than 6% above its mid-February 2021 level from one year ago.

Bring out the Excedrin as the headaches continue. Limited supplies placed buyers on the defensive as the scramble for product ensued with springtime approaches. As a result, 2×4 Western S-P-F 1650fb MSR buttoned up the week higher by 3-1/2%, eclipsing the previous week’s 2-1/2% gain. The past month has seen 2×4 Western S-P-F 1650fb MSR rise by more than 6-3/4%, while it stands more than 26-1/4% above its mid-February 2021 level.

Robust demand among flustered buyers easily kept producers in control, as pricing rose to levels last seen in June 2021. For the week, 2x4x8′ PET KDHF Solid Studs swelled more than 5-1/2%, as it continued marching north following the previous week’s 6-1/3% jump. Digesting the action over the past month, we see that 2x4x8′ PET KDHF Solid Studs find themselves more than 6-3/4% higher, as they now stand approximately 41-3/4% above their mid-February 2021 trading level.

Following in the shadows to its shorter counterpart 2x4x9′ PET KDHF Solid Sawn Studs added to the previous week’s momentum. 2x4x9′ PET KDHF Solid Sawn Studs added nearly 4-2/3% for the week, a relief compared to last week’s 7% escalating effort. For the month, 2x4x9′ PET KDHF Solid Sawn Studs find themselves 3% higher while positioned more than 16-3/4% above their price posted exactly one year ago.

The churn higher continues! Thanks to the strong demand in OSB, plywood has benefited from the lack of availability of OSB as pricing and demand continue to climb. Limited offerings forced a number of producers to allocate sales volumes, with a handful of mills opting to go off-market. Although, as noted last week, the price disparity between plywood and OSB continues to climb, as it ended the week at its second-highest level in history. More on that later. 4x8x1/2” CDX Plywood edged higher by nearly 5-2/3% for the week, adding to last week’s 4% positive effort. As we cross the middle of February, 4x8x1/2” CDX Plywood now stands upwards of 8-3/4% higher over the past 4-weeks, while it is positioned just nearly 25-2/3% above its price from one year ago.

Similar price and volatility were found in the plywood floor sheathing category as it too garnered significant interest during the week. 4x8x3/4″ T&G UDLX Plywood surged, gaining 5-2/3%, quickening its rise from the previous week’s 2-1/4% effort. As a result, year-on-year, 4x8x3/4” T&G UDLX Plywood finds itself standing more than 25-1/3% above its trading price posted from this time in February 2021 while remaining more than 8-3/4% higher over the past 4-weeks.

SAME OLE’ STUFF, DIFFERENT WEEK! The continuation of panicked buyers once again scrambled to find products amidst one of the most challenging times in traders’ memories. Amidst the insanity, caution entered traders’ minds as prices escalated to historic proportions. Unlike other years, transportation is currently the wild card at hand. When (not if) the transportation woes are remedied, the material will begin to flow, and the law of supply-vs-demand will start to balance things out. Unfortunately, we are not there yet. Amid the made-dash scramble this week, once again, the “Commodity King” flexed its muscle as asking prices in the secondary wholesale market reached premiums of 28-1/2% above print for those buyers forced to fill emergency needs. Ouch! For the week, mill pricing of 4x8x7/16” OSB jumped by upwards of 8%, virtually lock-step with the previous week’s 8-3/4% rise. Nevertheless, the king ends the past 4-weeks 46% higher and now sits roughly 45-2/3% above its mark from precisely one year ago.

The bold push in OSB prices helped inflate the OSB to Plywood premium, as it rose to the second-highest level in history. As a result, we close out the week with 7/16″ OSB vs. 1/2″ CDX at a PREMIUM of 10.2%, a sizeable increase from the previous week’s 7.8% mark. We end the week a mere earshot from the historical premium reached back in late-October 2020 of 14.7%. Could next week be the week? Stay tuned to find out.

GOT FLOOR SHEATHING? Uggg is the only family-friendly word to describe buyers’ utter frustration in the premium enhanced resin OSB floor sheathing market. Availability is close to non-existent, as continuing limited supplies are more than frustrating buyers. Additionally, logistics issues that continued plaguing torture best describe what buyers went through this week, as rumblings of dealers running out of stock were not uncommon. As a result, 4x8x23/32” T&G OSB jumped by nearly 7-1/2%, adding to last week’s 8% rise. The past month has seen 4x8x23/32″ T&G OSB gain almost 34-3/4% while leaving it north of 43-3/4% above its price point from precisely one year ago.

PREMIUMS ABOUND! The inbalance volatility of plywood and OSB helped elevate the PREMIUM of OSB vs. plywood again, as it finished the week at 7.4% compared to last week’s 5.7% mark.

The approaching spring kept buyers in the acquisition mood as demand outweighed supplies. However, some intriguing and I think interesting news that was released this week was two top Canadian producers would be curtailing production. Both Canfor and West Frasier announced they will be cutting production in direct response to the current transportation restraints and other factors. I am making a mental note of this, as my gut tells me plenty of lumber is available, and the large producers know this. I believe they are preparing for the transportation relief ahead to ensure that the market is not flooded with over-supply, as the case was last year—just my two cents. As the third week of February came to a close, my composite managed a decent gain of $67.1mbf, rising a solid 5.34%, pushing above the $1300mbf mark, finishing at $1323.6mbf, its highest level since mid-June 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.

WHEN WILL MY ORDER ARRIVE? That is a great question. This exact conversation echoed throughout the industry this week, as producers could not provide their buyers with the answer. So who in their right mind would agree to make the purchase with literally no guarantee as to when it would arrive. Is it 2-weeks or 4-weeks? This kind of important information is critical to running any business. Regardless of the logistics headaches plaguing the market, 2×4 2/Btr Kiln Dried Spruce-Pine-Fir Western Mill shook it off and ended the week on the move. As a result, 2×4 2&Btr Kiln Dried Spruce-Pine-Fir Western Mill posted increases totaling nearly 4%, halving the previous week’s 8% rise. Over the past month, we have seen 2×4 2&Btr Kiln Dried Spruce-Pine-Fir Western Mill jump higher by more than 8% as it stands more than 31-3/4% above its price point from precisely one year ago.

The spot-month of March hit a resistance point mid-week, as it hit $1336mbf before retreating through the remainder of that day. A more bearish tone was present both Thursday and Friday as the market digested the market’s current elevated levels. The March 2022 contract closed out the top-side resistance week with a 4.52% discount, fractionally close to the previous week’s 4.39% mark.

The week’s price action helped slightly brighten the hopes of better prices ahead, as the previous discounts received a little more cushion. The May 2022 contracts eased, closing out the week with an 11.77% discount, more than the prior week’s 10.14% discounted mark. The July 2022 futures to cash discount increased ever so slightly, finishing at 17.92% versus the previous week’s 16.39% mark. The shift was also seen with the September 2022 futures to cash mark, as it ended with a 25.06% discount compared to last week’s 19.33% mark. The November 2022 contract also experienced growth, closing the week with a 27.25% discount, expanding the previous week’s 19.82% discounted mark. Looking to next year, the January 2023 contract wrapped up the week with a futures-to-cash discount of 27.6%, compared to the previous week’s 19.82% mark. And finally, the March 2023 contract left us with a 28.05% discount, solidly above last week’s 20.29% discount. Until next week… Shoe out!

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