Softwood lumber prices are flatlining due to the closure of manufacturers, making it very difficult for producers to balance supply and demand. Production within the US and Canada has caused orders to be stretched as much as possible to decrease the amount of backlash the companies felt. Unfortunately, the ability to slip on by was only short lived as builders in America felt the flatline more and more as the weeks dragged on.
Chicago Mercantile Exchange has all eyes on them in regards to the trading of softwood when they closed a July contract at $360. A few days later a September contract had decreased by $12. All in which provided little hope in the recent price drops possibility of reversing direction.
The Effect of the Flatline of Softwood Lumber Prices
In regards to the flatline of softwood lumber pricing, wood production orders at most sawmills were within one week or less, which for this time of year was extremely short. Fortunately, most manufacturers have been able to extend orders to create a more stable duration as we mentioned above. Many manufacturers have been able to book out as far as two weeks, which has helped production in a sense, and taking off as much stress as possible.
Thankfully, the demand was high enough that it prevented suppliers from needing to cut their prices. According to Madison’s Lumber Reporter, “Softwood lumber sales and trading on the futures board took a step back as players in Canada and the U.S absconded for national holiday”.
In regards to this flatline, It seems as though buyers have found a new price range that is among the lowest seen, and of course during the season’s slowest time this caused an uproar within the sawmills. Madison’s reports that these prices are expected to stick around until Labor Day. Typically, prices lower in the autumn and the year usually ends with lows. The past few years on the other hand have been anything but normal in regards to trends and pricing. We haven’t seen a steady flow with pricing all over the board.
When will Softwood Lumber Prices Increase?
Lumber prices remain flatlined with the occasional product commodity with pricing increasing and decreasing. As of now, it all depends on the day and where the demand is at.
Western Spruce Pine Fir for example has been at a steady $402 thousand board feet. In July, the price was up $104 and 35%, which is more than has been recorded. The same time last year, the price was actually lower at -35%. Other products have been reported as constantly changing.
Madison’s Lumber Reporter also stated, “Two-tiered sales activity remained prevalent as secondary suppliers continued to offer quick shipment and slightly lower price levels than sawmills”.
Due to holidays in Canada, many people were on leave which caused all trading of Eastern Spruce Pine Fir to be at a standstill with other products. However, they held firm pricing as levels continued to flatline.
Quebec producers prepared for a two week construction shutdown. With roughly two weeks of orders at hand, finding other sources of demand became a huge priority amongst these producers over the next couple weeks.
Will these numbers continue to flatline or will we see an uprise? We are moving out of the busy summer months and back into autumn which leaves everyone on the edge of their seats. If this season ends with these numbers and with the demand issues we are facing, what does that mean for next year’s numbers?
As stated by Madison’s Lumber Reporter, it is thought that this flatline was caused from personnel throughout Canada and the US being on leave for holiday. Is this what prompted the flatline or are there more details that we are missing?
The building industry is constantly changing based on new building trends, products that are available, and the environment. All of which play a big part in supply and demand with new products being launched. With the start of new building materials manufacturers, who knows where we will stand within the next year. As the busy season comes to a close, producers are left with the thought of how they can improve their products’ demand and what they can do to come out on top, rather than fall to the bottom next year.