True summer-like days extended across North America this week as lumber and panel prices in the US and Canada floundered, writes Keta Kosman in
Madison’s Lumber Reporterwww.madisonseport.com
Producers and wholesalers could not agree on the situation with the cash market; resellers claimed growing inventories and weak demand even as sawmills increased production.
Prices of construction framing lumber in the west sank mostly on an extremely depressed futures board and equally extreme poor sentiment.
Bizarrely, southern yellow pine prices — a commodity both produced and consumed within the US — continued their steady price gains of the past couple of weeks. At the same time, the latest export data out of British Columbia — released Wednesday — shows at least steady if not slightly increased lumber shipments offshore so far this year.
Where is this market weakness coming from? Suggestions that futures are responsible are laughable at best, given that trading volumes are less than one-quarter what they were prior to the financial collapse of 2008. How much of an impact can futures have on the cash market, realistically, when there are barely 400 rail cars worth of wood being traded per session on that board?
A fear of repeating last year’s almost $100 drop in the value of benchmark dimension lumber commodities presents itself as a possible reason for this rampant caution. Players would rather keep inventories lean and get caught paying slightly more in a rising market than over-stock now and have difficulty unloading more expensive wood a month down the road.
Western Spruce-Pine-Fir KD 2x4 #2&Btr lost $12, or 3.6 per cent, to US$325 mfbm (net FOB mill). Eastern SPF and Douglas fir green prices were equally soft, however Southern Yellow Pine 2x4s on the East side popped another $10, or 2.3 per cent, to US$435 mfbm.
Data released by the Western Wood Products Association Friday shows that, following a significant drop in December to around 75 per cent, both Canadian and US sawmill capacity climbed to 85 per cent for March 2014.
This is an enormous amount of wood production available to come back online, and shows good discipline on the part of manufacturers to keep supply in line with demand. During “normal” times of lumber production and shipments, sawmills typically run at around 95 per cent of full capacity.
Producers reported sufficient log decks and solid order files, providing strong indication of status-quo as summer rolls on.
The ongoing deplorable situation with transportation actually worsened this week for Canadians — a seeming impossibility — with
Canadian National Railway (TSX: T.CNR, Stock Forum) in British Columbia missing even more switches and losing more capacity somehow.
Expected, and long-promised, rail cars failed to materialize in eastern Canada as well. Truck availablility was also terrible, with Quebec as usual having the worst time of it.
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Keta Kosman
Publisher
Madison's Lumber Reporter
604 984-6838
www.madisonsreport.com