March 26, 2021
DO YOU HEAR SOMETHING? Are the roaring crowds from the 2021 NCAA Basketball Tournament drowning out the faint sounds of a potential market shift? With building material costs continuing to skyrocket, are there any signs of relief ahead? This week may have offered up a sign to that question as April fast approaches. So, without further adieu, get ready to dive into the place I like to call: ‘The Wonderful World of Wood.’ Enjoy…
The green font last during St. Patrick’s Day festivities changed a bit, as this week offered up a slightly different shade. Narrow dimensional stock (2×4-2×6) seemed to find a near-term cruising altitude, as 2×4 2/Btr KDHF closed out the week unchanged, as it decelerated further compared to last week’s ½% gain. This week marks the first time in two-months that 2×4 2/Btr KDHF has not printed higher, as a bit of relief from the continual onslaught of rising prices finally arrived.
2×6 2/Btr KDHF could not match the action of its narrow counterpart, as it inched higher by ¼%, coming close to mirroring last week’s less than 1/5%. 2×6 2/Btr KDHF notched yet another new record high, as it closes out the month of March, an astonishing 150.6% higher than its position one year ago.
Wide dimensional stock (2×10-2×12) presented a neutral stance for the second week, as traders buyers sensed the market losing its steam. 2×10 2/Btr KDHF brought forth another welcome sight, as they closed out the week unchanged, mirroring last week’s stagnant price action.
After eight weeks of upwards movement, 2×12 2/Btr KDHF notched its first week of unchanged price action, as it pulled the reigns back compared to last weeks near 1-1/2% gain.
Green DF Timbers continued inching higher, thankfully at a slow and measured pace. Green DF Timbers added nearly 1%, slowing a touch compared to last week’s less than 1-1/2% effort.
2×4 Western S-P-F 1650fb MSR joined in on the market’s digestive tone, as pricing closed out the week unchanged for the first time since late January. This comes off last week’s near 1-1/4% gain, as it finds itself roughly 159-3/4% higher than where it stood just one year ago.
A faint sound of a canary could be heard in the coal-mine, as traders sensed the long-waited market shift. As was the case late fall, 2x4x8′ PET KDHF Solid Sawn Studs were the first product to hint of a possible market retraction. Could the same be happening now? After 2-months of rising action, 2x4x8′ PET KDHF Solid Sawn Studs posted its first shade of red font since late January, as prices dipped by ½%, erasing last week’s mere ½% gain.
A more significant squawking could be heard from 2x4x9′ PET KDHF Solid Sawn Studs, as their volume was a bit louder compared to its shorter counterpart. 2x4x9′ PET KDHF Solid Sawn Studs retracted by more than 1-1/2%, giving back all and then some of last week’s more than 1/3% gain. Since topping out last week, 2x4x9′ PET KDHF Solid Sawn Studs found themselves 30-1/3% higher than their low-water mark of the year, seen back on January 22nd.
Modest demand for plywood kept pricing pressure on the move, continuing the sporadic “On and Off Market” conditions. Order file lead times stretching into May allowed producers to remain in control. 4x8x1/2″ CDX Plywood posted another up week, thankfully only rising just under 2%, an improvement compared to last week’s more than 4-1/3% effort. As we approach the month of April, 4x8x1/2″ CDX Plywood sits more than 204-1/3 above its late-March 2020 early COVID pandemic retraction levels.
For the second consecutive week, 4x8x3/4″ T&G UDLX Plywood wan on the move, gaining 3-3/4% this week, a smidgen under last week’s near 4% gain, showing no sign of a market shift. 4x8x3/4″ T&G UDLX Plywood currently finds itself 151-1/2% higher than where it began last spring, before the severe pandemic crash.
The word for the week is: OUCH! After posting minimal gains over the past few weeks, printed mill pricing for OSB finally roared to life. Like gas being poured on a fire, 4x8x7/16″ OSB exploded higher by nearly 10%, as the slow and mundane persistent 2% upwards rally was obliterated. I feel compelled to put things into a bit of perspective for everyone. This week’s surge from “Commodity King” really needs to be compared to a 29%+ explosion higher. The current ridiculously high prices of OSB make the percentage action very misleading. With the recent OSB price trading 226% above its 10-year historical average, every weekly percentage move is exponentially higher. In my 30+ years in the building material supply business, I don’t ever recall a triple-digit upwards move in a single week. I have witnessed weekly price corrections of triple digits losses, but never that big of an upwards surge. OSB is totally out of control and will have severe ramifications to the home building industry this year. Mark my words…
The week’s skyrocketing surge in OSB helped severely close the DISCOUNT of 7/16″ OSB vs. 1/2″ CDX gap by 6%. 4x8x7/16″ OSB ended the week with more than a 16-3/4% discount compared to 4x8x1/2″ (4-Ply) CDX Plywood, a dramatic changed compared to last week’s more than 22-3/4% difference.
Thankfully, 4x8x23/32″ T&G OSB was a bit more subdued than its oriented strand board counterpart, but not by much. 4x8x23/32″ T&G OSB swelled 7-1/2%, rising nearly 5-fold compared to last week’s more than 1-1/2% effort. The weekly surge from 23/32″ T&G OSB could be compared to an 18%+ move higher, as 4x8x23/32″ T&G OSB currently sits more than 156-1/4% above the 10-year historical average, making the weekly rise a bit more painful.
OSB’s strength this week shrank the DISCOUNT of OSB vs. Plywood to nearly 13-2/3%, as it closes out the month of March in the upper third of its historical discount range.
Once the pre-Easter week was said and done, the bullish price action seen in the lumber market added some further evidence it may be tuckered out. The massive spike in OSB pricing trumped any red font effort, as my composite rose more than 2-2/3%, adding $29.71mbf, to end the week at $1135.3mbf. With the commodity lumber and panel markets in such panic and disarray this spring, I will look to the bright side of the Men’s NCAA’s March Madness Basketball Tournament. With four Pac-12 teams still in the hunt during Sweet 16 weekend, and my home state of Washington Gonzaga Bulldogs looking solid, I will take a well-deserved rest away from the lumber market until next week. GO BULLDOGS…
May futures got off to a quick start this week, as Monday’s strong upwards price surge quickly pushed through the previous upside resistance. Green font was the dominant shade four of five trading days, as Friday provided the only relief as it printed a red inside candle. Bullishness helped push the May contract up $66.0mbf above last Friday’s close, rising upwards of 7.5%, as it settled the week at $952.6mbf.
Looking at the FUTURES-TO-CASH comparisons, May offers a significantly lower discount of 7.06% for the week than last Friday’s 13.6% finish. The July contract provided a bit of bullishness itself, moving higher to end at an 18.15% discount, versus last Friday’s 21.06% close. Looking out to September, the futures-to-cash discount shrank, to end at 24.78% compared to the previous week’s 26.63% finish. November’s discount shrank slightly, finishing at 30.63%, compared to last week’s even 32.00% discount. The January 2022 contract discount retracted by nearly 10%, as it closed out the week at 30.63%, compared to last week’s 33.85% mark.
Sales Manager | Author
Roof Truss Supply, Inc. | Shoe’s Lumber Report
(425) 273-7388 | (425) 219-6118