March 4, 2022

ARE WE CLOSE? That is a great question, as the current market heights are making everyone a bit nervous. As traders assess the factors weighing in on the nation and world, who can blame them for getting slightly nervous at the market’s current extreme elevated level. To put things into perspective, my composite sits just below 18-3/4% from its historical high posted back on May 28, 2021, leaving a bit of upside before forging any new highs. What I can assure you is a dip is coming. The question is when… On that note, let’s cut to the chase and jump right into the place I like to call: ‘The Wonderful World of Wood.” Enjoy…

The bulls continued running this week as the world watched the geo-political turmoil unfold on the other side of the globe. However, cautiousness among traders remained prevalent as mill order files extended in the 4+ week range. As a result, buyers became more reluctant to step up and issue purchase orders for orders that would arrive until mid-late April. Once again, the record highs for the year fell as pricing crawled higher. For the week, 2×4 2/Btr KDHF inched higher by nearly 1-1/2%, similar to the previous week’s 1-3/4% effort. Over the past month, we have seen 2×4 2/Btr KDHF post gains totaling north of 12-1/4%, while it stands nearly 25-2/3% above its early-March 2021 level.

Similar action was present with 2×6 2/Btr KDHF, which traded identical to the previous week’s action. For the week, 2×6 2/Btr KDHF added upwards of 2%, adding a smidgen of momentum from the prior week’s 1-2/3% edge higher. Looking back, we see that 2×6 2/Btr KDHF is up nearly 12-1/4% over the past 4-weeks while positioned upwards of 18% above its price point posted one year ago.

A slightly softer tone was present in the wider dimensions, as they eased somewhat compared to the previous week’s action. As a result, 2×10 2/Btr KDHF posted gains of 1-1/4% for the week, adding to last week’s 3% effort. For the month, 2×10 2/Btr KDHF finished up nearly 10-1/2%, arriving at the beginning of March 17-2/3% higher than it stood one year ago.

2×12 2/Btr KDHF drafted behind its narrow counterpart, as it too slowed in comparison to last week’s movement. This week, 2×12 2/Btr KDHF posted gains just over 3/4% by Friday, slicing into the previous week’s 1-1/3% effort. As a result, 2×12 2/Btr KDHF closes out the last month higher by more than 5-1/2% than its early-February 2022 mark while finding itself nearly 10-3/4% above its trading level from one year ago.

Turning our eyes to Green DF Timbers, we see that demand continued outpacing readily available supplies, this pushing numbers higher. As a result, Green DF Timbers rose upwards of 3-3/4% by week’s end, outpacing last week’s 2-3/4% effort. Over the past 4-week’s, Green DF Timbers have seen activity north of 9-3/4% while remaining positioned 7-3/4% above its early-March 2021 level from one year ago.

Logistical challenges continued hampering the market, as a gaggle of producers opted to go off-market due to the overwhelming shipping struggles. As a result, 2×4 Western S-P-F 1650fb MSR rose another 2-1/3%, as it mirrored the previous week’s 2-1/3% gain. Over the past month, we have seen 2×4 Western S-P-F 1650fb MSR increase by 11%, while it stands north of 27-3/4% above its early-March 2021 level.

Caution remained present in the stud category this week, as the previous week’s price easing gave way to higher numbers. Mills managed to fill their order files with inquiries extending out 4-weeks, which is becoming more and more common. As a result, 2x4x8′ PET KDHF Solid Studs inched higher by north of 1-3/4%, a slight increase to the previous week’s 1% move. As we assimilate the action over the past month, we find the 2x4x8′ PET KDHF Solid Studs find themselves upwards of 15-2/3% higher, as they now stand upwards of 37-1/4% above their early-March 2021 trading level.

No canary quite yet! Last week’s shuck-and-jive was just that, a shuck-and-jive, as momentum tilted back towards the producers, as buyers folded on the perceived market bluff. 2x4x9′ PET KDHF Solid Sawn Studs rose by 1/3% this week, an unwelcome site compared to last week’s near unchanged effort, as hopes of a market shift were muted. For the month, 2x4x9′ PET KDHF Solid Sawn Studs find themselves 12-1/3% above their early-February levels while positioned more than 8-3/4% above their price posted exactly one year ago.

As order files extended deep into March, continuing strong demand in the plywood category kept pace with production. Upwards price acceleration slowed as digestible increases were seen. For the week, 4x8x1/2” CDX Plywood edged higher a bit more than 3/4%, as it added to the previous week’s 4% surge. As we begin the new month of March, 4x8x1/2” CDX Plywood finds itself 15-1/4% higher over the past 4-weeks, while it remains positioned just nearly 13-3/4% above its price posted one year ago.

Similar action was seen in the plywood floor sheathing category, as it too inched higher during the week. 4x8x3/4″ T&G UDLX Plywood posed gains totaling over 3-1/4%, a slowing from the previous week’s 5-2/3% jump. 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 nearly 12% higher over the past month.

SAME STORY, DIFFERENT WEEK. Continued limited mill offerings kept buyers in scramble mode in their attempts to cover immediate needs. All eyes remained focused on the secondary market, as extreme premiums in the 17%+ range remained common. Rising fuel costs and fears of the long-term impacts of the Russian / Ukraine conflict only added to the market’s price exhaustion. As Friday arrived, the “Commodity King” flexed its muscle as 4x8x7/16” OSB inched higher by nearly 1-1/2%, as it continued pulling the reigns back compared with the previous week’s 5-1/2% surge. The king ends the past 4-weeks 23-2/3% higher and now sits upwards of 49-1/2% above its mark from precisely one year ago.

The slight rise in prices helped inflate the OSB to Plywood premium a little more, as the premium remains at the second-highest level in history. We close out the week with 7/16″ OSB vs. 1/2″ CDX at a PREMIUM of 12.5%, a minor increase from the previous week’s 11.8% mark.

GOT FLOOR SHEATHING? Yes, I repeated that phrase for the third week, as it only fits the circumstances. Dealers scrambled and substituted products in their efforts to keep projects moving forward. to be creative in keeping jobs moving forward. As a result, 4x8x23/32” T&G OSB added a little over 1%, as upwards price momentum slowed compared to last week’s 5-1/2% jump. Over the past month, we have seen 4x8x23/32″ T&G OSB gain almost 23-3/4% while leaving it upwards of 48-2/3% above its price point from precisely one year ago.

The imbalance of upward moves of both plywood and OSB helped shrink the PREMIUM of OSB vs. plywood for the first time in five weeks, finishing at 9.4% compared to last week’s 9.8% mark.

A continuation of solid orders files kept the cautiousness at bay, as buyers accepted the markets slow and steady rise. The first week of March helped push the composite higher, as it added $23.6mbf, rising nearly 1-3/4%, to close at $1390.0mbf.

  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.

The ongoing skirmish across the pond garnered traders’ attention as the lumber futures market influenced the week’s S-P-F trading action. 2×4 2&Btr Kiln Dried Spruce-Pine-Fir Western Mill posted increases over 2-1/2%, softer than the previous week’s 3% rise. Over the past month, we have seen 2×4 2&Btr Kiln Dried Spruce-Pine-Fir Western Mill rise by more than 18-2/3% as it stands 36-2/3% above its price point from precisely one year ago.

The spot March contract had a solid trading week as we enter expiration month, posting green font four of five trading days. Friday provided some dynamic price action, as the contract opened the day at $1477.4mbf before sinking lower during the first hour of trading. After the initial morning surge, the contract dipped as low as $1396mbf before recovering those losses to close out the day at $1452.0mbf. The March 2022 contract finished the top-side resistance week with a 3.71% premium, significantly above the previous week’s 4.52% discounted mark.

The week’s volatility muted the previous week’s hopes of significant price discounts ahead as the earlier values eroded. The May 2022 contracts dropped, closing the week with a 6.37% discount, more than the prior week’s 12.58% discounted mark. The July 2022 futures to cash discount dipped as well, finishing at 16.43% versus the previous week’s 22.4% mark. The shift was also realized with the September 2022 futures to cash mark, as it ended with a 23.26% discount compared to last week’s 27.69% mark. The November 2022 contract also took a hit, closing the week with a 29.29% discount, deteriorating from the previous 34.01% mark. Looking to next year, the January 2023 contract wrapped up the week with a futures-to-cash discount of 31.37%, compared to last week’s 32.15% mark. And finally, the March 2023 contract left us with a 30.66% discount, lower than the previous week’s 32.89% discount. Until next week… Shoe out!

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