July 22, 2022

WHAT IS THAT SMELL? In the rare case you have been hiding under a rock this past week, the odiferous odor you are smelling is June Housing Data. U.S. Housing Starts fell for the first time in more than two years, and the NAHB/Wells Fargo Housing Market Index (HMI) plummeted 12 points, landing at 55 for July. That is the lowest reading since May 2020 and recorded the second largest monthly decline. YIKES! It would be an understatement to say it was a challenging week for housing data. So, with awful housing news abound, let’s see how the not-so-positive data impacted the place I like to call: ‘The Wonderful World of Wood.” Enjoy…

With rough housing news in abundance and the dog days of summer upon us, it is not surprising that this week’s trading action was a bit of the same. Buyers became increasingly weary as the week progressed, as more than more gloomy housing industry news came across the wire. June’s weak housing start data showed a solid 8.1% drop, proving that traders’ hunches were validated. Nevertheless, despite the rough news, 2×4 2/Btr KDHF managed to climb higher by more than 2-1/4%, as it slowed compared to the previous week’s 4% jump. As a result, 2×4 2/Btr KDHF has moved higher by more than 11-1/2% over the past month, while it stands at roughly 40-2/3% above its late-July 2021 level.

2×6 2/Btr KDHF managed to extend gains from last week, as upwards momentum had a little pep in its step. For the week, 2×6 2/Btr KDHF rose by less than 1-1/2%, accelerating compared to last week’s 1/3% effort. As a result, 2×6 2/Btr KDHF is nearly 4-3/4% higher over the past 4 weeks while remaining 15-2/3% above its price point one year ago.

Strength waned in the wide dimensional stock category as 2×10 slowed its upwards momentum towards higher ground. By Friday, 2×10 2/Btr KDHF added upwards of 1-1/2%, halving the previous week’s 3-1/4% effort. Over the past month, 2×10 2/Btr KDHF is now higher by more than 8-1/4% from where it was 4 weeks ago while standing nearly 12% above its late July 2021 levels.

2×12 2/Btr KDHF managed to add to last week’s stagnant showing and closed out the week up ¾%, gaining minimal ground compared to the previous week’s unchanged effort. Over the past month, we find 2×12 2/Btr KDHF up more than 4-1/4% compared to its mid-June levels while positioned almost 1-3/4% above its trading level posted precisely one year ago.

Another down week! The punishment continues for Green DF Timbers, as they marked their 6th week of downward action. As Friday arrived, Green DF Timbers dropped by more than 2-3/4%, further padding last week’s 4-1/3% downward effort. Over the past 4 weeks, Green DF Timbers are off more than 14-1/3% while positioned, while coincidentally, that stands nearly 16-1/2% below their late July 2021 levels.

INSERT ANOTHER YAWN HERE. 2×4 Western S-P-F 1650fb MSR remained stalled this week, as stagnation was the game’s name. As a result, 2×4 Western S-P-F 1650fb MSR closed out the week unchanged again, mirroring last week’s unchanged effort. As a result, 2×4 Western S-P-F 1650fb MSR stands 1-1/4% higher over the past month, standing almost 9-1/2% above its late-July 2021 level.

THE CANARIES ARE SILENT – FOR NOW! 2x4x8′ PET KDHF Solid Studs posted another lackluster effort this week, as another small gain totaling more than 3/4% was seen, matching last week’s 3/4% effort. As the end of July came into view, 2x4x8 PET KDHF Solid Sawn Studs now sit more than 6-3/4% higher over the past 4 weeks while positioned just 48-1/4% above their late-July 2021 trading levels.

COPY AND PASTE! 2x4x9′ PET KDHF Solid Sawn Studs rose more than 1-1/3% by Friday, as they made a copy-and-paste effort from the previous week’s 1-1/3% move. Over the past month, 2x4x9′ PET KDHF Solid Sawn Studs are nearly 11-1/2% higher than their mid-June levels while positioned upwards of 35-1/2% above their price one year ago.

Much of the same was experienced in the plywood sheathing category, as inquires remained moderate to light. However, interest was enough for producers to raise pricing slightly, as 4x8x1/2” CDX Plywood added more than 3% for the week, an improvement compared to last week’s 3% effort. Over the past month, 4x8x1/2” CDX Plywood finds itself more than 4-2/3% higher while positioned nearly 43-1/3% below its price one year ago.

A week of declines was all it took to spark adequate purchases to fill current mill order files as pricing ended its decreases. As a result, 4x8x3/4″ T&G UDLX Plywood ended this week unchanged, slowing a touch compared to the previous week’s 1/3% decline. Nevertheless, 4x8x3/4” T&G UDLX Plywood stands upwards of 27-3/4% below its trading price posted in late-July 2021, while it is left more than 4-1/2% lower over the past month.

WEEK TWO – AND COUNTING! After regaining footing a few weeks ago,Commodity King” managed to inch higher again this week. Unfortunately, buyers became a bit skittish amidst the lethargic housing market news, as pricing lacked any upwards fervor. For the week, 4x8x7/16” OSB posted gains of nearly 4-3/4%, slowing from last week’s 7-1/2% jump. Nevertheless, the king ends the past 4-weeks up more than 21-3/4% as it still stands a significant 57-3/4% below its price point from precisely one year ago.

Similar action in the OSB and plywood sheathing sector helped to erode the 7/16″ OSB vs. 1/2″ CDX DISCOUNT, ending the week at 34.6%, compared to the previous 35.6% mark.

A similar slowing was seen in the OSB floor sheathing category as 4x8x23/32” T&G OSB moved further off of its recent lows. As Friday arrived, 4x8x23/32” T&G OSB closed out the week up more than 2-2/3%, decelerating off of last week’s 4-1/4% leap. However, over the past month, we have seen 4x8x23/32″ T&G OSB rise more than 10% while leaving it nearly 51-2/3% below its trading level from one year ago.

The stagnation in plywood, combined with the slight rise in OSB, pushed the Oriented Strand Board floor sheathing finished with a 43.5% DISCOUNT, down from the last week’s 45.0% mark.

2×4 2&Btr Kiln Dried Spruce-Pine-Fir Western Mill was uninspiring at best, as it was flat as a pancake, ending the week unchanged, slowing considerably compared to last week’s 4-2/3% bounce. Over the past month, we have seen 2×4 2&Btr Kiln Dried Spruce-Pine-Fir Western Mill rise 11-2/3%, while it stands upwards of 36-3/4% above its price point posted precisely one year ago.

September 2022 futures to the cash mark dropped like a rock as the end of July came into view, settling Friday with a 12.91% discount, plummeting nearly 3-fold compared to last week’s 4.24% discounted mark.

The November 2022 contract followed a similar path but strengthened, ending the week with a 12.54% discount compared to the previous week’s 5.13% mark. Peeking out next year, the January 2023 contract did an about-face as it turned on a dime to end the week with a futures-to-cash discount of 8.66%, a massive reversal versus last week’s 1.46% mark. The March 2023 followed suit, as it too reversed but managed to hold onto its premium to cash, ending at a 0.39% discount plummeting from last week’s 2.66% mark. Last but not least, the May 2023 contract followed the pessimistic tone, as it faltered to close out the week with a 0.37% discount, reversing course compared to last week’s 2.67% level.

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