By Don Magruder
The RoMac Building Supply Wood Commodity Index (Index) for December dropped $68.31 per thousand to $358.69 or 16.0 percent as holiday slowdowns, winter weather, and softening demand in other parts of the country suppress pricing. The downward pricing trends this time of year match the market’s normal capitulations as Americans focus more on Santa Claus and less on home projects. The belief that Federal Reserve interest rate escalations may slow are giving hope to both builders and potential homeowners as 2023 nears.
The lumber portion of the Index dropped 11.1 percent to $400.48 per thousand with most spruce lumber giving back $45 to $55 per thousand. Wide-with pine retreated 2.2 to 5.7 percent with narrow pine giving back just a little more than 2 percent. These numbers are at levels not seen since the pandemic and should be scraping the bottom. Builders should be very careful not to use today’s pricing for mid-spring projects.
The sheathing portion of the Index dropped 20 percent as the capitulation in OSB sheathing finally took place with a drop of $110 per thousand or close to 30 percent. OSB manufacturers had resisted this, but production outpaced demand. CDX pine plywood which had capitulated earlier was flat with less than 2 percent declines. These numbers are bargains and many dealers may be flushing out inventories which are downplaying demand erroneously. If dealers step in for restocking in early 2023, these markets could firm, especially if winter weather abates.
Expectations for pricing are to remain down and flat until the market and interest rates provide clearer direction. The next few months could see some volatility as dealers restock for the year and demand in the spring cranks up.
Finally, I hope that everyone has a very Merry Christmas and here’s to a New Year with less volatility and plenty of supply. Thank you for reading the RoMac Lumber and Commodity Index. See you next year.
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.
Comments