By Don Magruder
The RoMac Building Supply Wood Commodity Index (Index) for August increased by 6.3
percent to $398.30 per thousand as production curtailments, mill closures, import issues,
and a threatened rail strike in Canada add a little strength to a market that continues to
struggle with lackluster housing demand. Even though many in the supply industry can see
better days ahead as interest rates appear to be on the verge of moderating, the continued
demand struggles in the housing markets are forcing companies to capitulate in areas
where production is not profitable.
The dimensional lumber portion of the Index increased 13.4 percent to $424.77 per
thousand as every sector gained in price. Studs were up solidly 6.0 plus percent while
dimensional spruce added 2.7 to 26.2 percent depending on the length’s popularity. 2x6
spruce really jumped adding 32.7 to 35.2 percent as supply tightened. Wide 2x12 pine
added 1.4 to 9.6 percent depending on the length while 2x4 pine pushed up more than
11.5 percent.
Mill closures and curtailments in Canada and Oregon along with a potential Teamster
strike against the Canadian Pacific Kansas City and Canadian National Railway are
pushing spruce pricing. Long-term reforestation policies for sustainable forests in Europe
adopted by the EU, could add more turmoil to the markets later in the year. Pine mill
closures and curtailments in the pine belt are adding uncertainty to pine buyers.
The sheathing portion of the Index increased 1.0 percent to $378.53 per thousand as CDX
pine and OSB sheathing go in different directions. Pine plywood added over the last 30
days 8.2 to 18.2 percent with 19/32 plywood going up the most. OSB sheathing dropped
$15 per thousand or 4.4 to 5.0 percent. The push in demand is probably a precursor of
increases to OSB, and you never know what the effects hurricane season will have on
these markets.
At this point, it appears the wood commodity markets have bottomed, and are starting to
move upward. Some supply headwinds may be forming and if the Federal Reserve does
start dropping interest rates, these markets could heat up quickly. Builders should be wary
of pricing in the last quarter of 2024.
Football season kicks off in a week, and soon pumpkin spice will be everywhere. Stay
safe!
The RoMac Wood Commodity Index is a weighted lumber and sheathing composite based on usage in Central Florida. By using wholesale pricing, the Index is a good indicator of the pricing direction for the next 30 days.
Don Magruder is the Chief Executive Officer of RoMac Building Supply in Central Florida, he is a former president of the Southeast Mississippi Home Builders Association and a past Associate Vice President of the Home Builders Association of Lake County.
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