February Market Update: Spring Brings Better Market Expectations

February 22, 2016

Spring looks promising for the lumber market and Freres Lumber Company.

However, it is very much a mixed bag, depending on region. Some areas are rolling along, others are OK, but not great. Even though we have encountered winter weather episodes around the country, for the most part, weather in the upper half of the country has not been bad – and many northern tier areas have had relatively mild winter temperatures, overall. For mid-February trading, we are probably not doing too bad. March is only 10 days away, with extended forecasts of mild weather across most areas of the country. That is not a bad thing for the building industry.

Prior to last week, prices on many CD items actually climbed a few dollars higher due to decent demand. Since that time, the market has lost some of its momentum and prices have given back a few bucks in trading this week. Our conversion rate on truck inquiries is good in the local market. No changes in buying habits – many buyers wait till they are out or almost out of stock. The overall malaise in commodity buying continues for the most part, though business in the field is good in many metro areas. Even though we are at several year lows in many or most commodity sheathing items, buyers continue to stay disciplined on purchases, afraid of potentially more downside. Whether or not that is a good strategy going forward into spring is always good material for discussion.

Some production has taken off in the west. A couple mills haven’t operated this year due to market conditions and a few others are hinting at some possible curtailment or downtime due to market conditions. So, that tells us something too. Dimension lumber trading has, by reports, traded well along several frontsthis week. For mid-February trading, that’s a good sign that tells us wood is shipping out to jobsites and getting replenished. That’s good news and reason for encouragement going into spring!

Bob Maeda, Plywood Sales