April 1, 2022

THE TIME HAS ARRIVED! Even though it is my April Fools Day edition, I opted to remain business-like and be serious. Yet, I am all for an excellent practical joke for those who know me. 😊 But I promise you, this is no joke. If you are overjoyed by this intro, you may be blessed to have a little spring added to your step as you dive in and explore all that shook out this past week in the place I like to call: ‘The Wonderful World of Wood.” Enjoy…

The spring leak that arrived last week magnified as prices faltered across the board and traders succumbed to the market’s shifting tone. The end of Q1 pressure and abnormally high pricing left most with an uneasy feeling as ascending interest rates brought forth the most concern. For the week, 2×4 2/Btr KDHF plummeted by more than 4-1/2%, as it added to the previous week’s 1/3% dip. Over the past month, we have seen 2×4 2/Btr KDHF post falter by more than 1%, while it stands nearly 21% above its early-April 2021 level.

2×6 2/Btr KDHF followed suit, as it too felt the market’s pessimism. As a result, 2×6 2/Btr KDHF dropped more the 4-1/2%, as it accelerated off of the prior week’s stagnant and ¾% activity. We now find 2×6 2/Btr KDHF is up nearly 4-3/4% over the past 4-weeks while remaining positioned almost 18-1/2% above its price point posted one year ago.

Similar erosion was seen in the wide dimensional stock category, as 2×10 2/Btr KDHF posted losses totaling upwards of 4-1/2%, as they added to last week’s losing 3/4% effort. For the month, 2×10 2/Btr KDHF is off nearly 2-3/4%, arriving at the beginning of April almost 8-3/4% higher than it stood one year ago.

After dipping slightly over the last few weeks, 2×12 2/Btr KDHF kicked things into gear as the bearishness unfolded. Once the week was sadi and done, 2×12 2/Btr KDHF carved out losses totaling more than 4-1/2%, adding to last week’s 1-3/4% drop. As a result, 2×12 2/Btr KDHF closes out the previous 4-weeks off by more than 7% than its early-March 2022 mark while finding itself now down more 2-2/3% below its trading level from precisely one year ago.

THE LONE SOLDIER. As the rest of the market did an about-face and retreat, Green DF Timbers shifted gears back into drive to end the week on the move higher. Green DF Timbers jumped by more than 5% by Friday, a momentum shift compared to the previous week’s unchanged effort. Over the past 4-week’s, Green DF Timbers are up more than 11-2/3% while remaining positioned nearly 14-1/4% above its early-April 2021 level from one year ago.

2×4 Western S-P-F 1650fb MSR declined upwards of 3-1/4% for the week, as it too jumped on the downhill bandwagon after slipping 2/3% last week. As a result, 2×4 Western S-P-F 1650fb MSR now finds itself lower by more than 2-3/4% over the past month, while it stands upwards of 19-3/4% above its early-April 2021 level.

LET THE CANARIES SING! The stud category is the product I follow like a hawk for hints of a market shift. After I hinted at a market shift three weeks ago, when 9’ PET Studs began to show early signs of a turning point, it was only a matter of time when the infection would spread. And that time has arrived! This week brought forth more bleeding, as 2x4x8′ PET KDHF Solid Studs were hammered by more than 8-3/4%, as the shift that commenced last week accelerated after the previous week’s 1% stumble. Over the past month, we see that 2x4x8′ PET KDHF Solid Studs find themselves upwards of 8-1/2% lower, as they now stand more than 23-3/4% above their early-April 2021 trading level.

FEEL THE PAIN! The sound of the canaries spread far and wide as the bleeding intensified as the new month of April arrived. For the week, 2x4x9′ PET KDHF Solid Sawn Studs were decimated by more than 13-1/2% as the retreat intensified, adding to the previous week’s 8% plunge. Over the past month, 2x4x9′ PET KDHF Solid Sawn Studs find themselves down more than 23-1/3% from their early-March level while positioned more than 17-2/3% below their price posted exactly one year ago.

THERE IS NO ESCAPE! Like last week, more price retreats were required to attract interested parties as purchases were minimal at best. As a result, 4x8x1/2” CDX Plywood dipped nearly 4% for the week, as it mirrored the previous week’s 4% defeat. Arriving at the beginning of April, 4x8x1/2” CDX Plywood now finds itself nearly 8-1/2% lower over the past 4-weeks while remaining 12% below its price posted one year ago.

Similar patterns in the plywood floor sheathing category were found, as numbers drifted lower as the end of the first quarter arrived. For the week,  4x8x3/4″ T&G UDLX Plywood edged lower by nearly 1-1/2%, compared to the previous week’s 1% effort. Year-on-year, 4x8x3/4” T&G UDLX Plywood finds itself standing more than 2% above its trading price posted from this time in April 2021 while remaining just 2-1/4% lower over the past month.

THE KING HAS BEEN WOUNDED! Last week I posed the question, asking if the apex was near. That would be yes. Lethargic inbound phone inquiries and a thinning sales backlog forced the producer’s hands as the tides turned. As a result, the “Commodity King” fell victim to the general market retreat as 4x8x7/16” OSB refunded more than 5% after last week’s stagnant and unchanged effort. The king ends the past 4-weeks more than 4-1/2% lower and now sits upwards of 10-3/4% above its mark from precisely one year ago.

Weakness across all products helped the OSB to Plywood premium retreat from last week’s record-setting high. As a result, we closed out the week with 7/16″ OSB vs. 1/2″ CDX at a PREMIUM of 17.4%, increasing the previous week’s 18.8% mark.

Similar yet milder action was seen with OSB floor sheathing as it altered its font color from black to red. As Friday arrived, 4x8x23/32” T&G OSB drifted lower by more 3-3/4%, a welcome site for builders after the previous week’s stagnant and unchanged effort. Over the past month, we have seen 4x8x23/32″ T&G OSB slip more than 3-1/3% while leaving it 22% above its price point from one year ago.

The imbalance of weakness of plywood and OSB pushed the OSB PREMIUM over plywood lower, finishing at 8.1%, compared to last week’s 10.9% mark.

As the market’s shifting tone took shape, traders remained mixed about how spring pricing will shake out. Claims of thin inventory levels were touted for a short-lived retreat. In contrast, others eyed rising mortgage rates, inflationary concerns, and world events as reasons for a continued retraction. Once the week was said and done, the font shade turned a deeper shade of red, as the composite dipped $55.7mbf, slipping nearly 4%, to button up the week at $1362.9mbf.

  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.

As traders flipped the calendar from March to April, the chase to find the bottom was on. Buyers opted to remain on the sidelines as producers slashed pricing to find attractive levels for buyers. Continued uncertainty of downside risk remained the dominant tone as the cash market to May lumber futures spread remained wide. For the week, 2×4 2&Btr Kiln Dried Spruce-Pine-Fir Western Mill was lamb-basted by more than 11%, after suffering losses of 3-1/2% last week. Over the past month, we have seen 2×4 2&Btr Kiln Dried Spruce-Pine-Fir Western Mill dip by more than 14-1/4% as it stands north of 14-3/4% above its price point from precisely one year ago.

The May futures contract ended the week lower, similar to the cash market, as Wednesday and Thursday’s intense downward sell-off days garnered attention. However, once the trading week was said and done, the May 2022 contract closed the week with an 18.09% discount, improving amidst the cash market’s weakness, down from the previous week’s 25.2% mark.

The July 2022 futures to cash discount eased, closing at 27.85% versus the previous week’s 34.96% mark. The downward swing also softened with the September 2022 futures to the cash mark, as it settled at a 29.43% discount compared to last week’s 39.18% mark. The November 2022 contract also improved (or worsened, based on your opinion) to close the week with a 32.5% discount, shrinking from the previous 41.1% mark. Looking out to next year, the January 2023 contract buttoned up the week with a futures-to-cash discount of 33.86%, compared to last week’s 41.21% mark. The March 2023 contract left us with a 33.33% discount, which eroded compared to the previous week’s 40.73% mark. And last but not least, the May 2023 contract closed out the week with a substantial 41.66% discount, creeping lower than last week’s notable 48.14% discount. Until next week… Shoe out!

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