March Market Update: Wood Products Markets Mixed, but Strong

April 24, 2017

Mixed Outlook on Wood Products Market

The plywood market has been, as often, a mixed bag. Following one supplier’s announcement that they were experiencing rail shipping problems last week and subsequently going off the market at all their mills for three days, the commodity sheathing prices popped up immediately to $15-20/m. That was on top of an already decently firm market. So, currently prices are at levels not seen in over two years, in November of 2014 . That can be both good or bad, depending on your point of view. If you are a producer, you have to be encouraged by the market’s ability to get to these levels so early in the building season. If you are a buyer, you may be worried (or cautious) for the same reasons. By the way, prices are at relatively high levels in ALL commodity lumber and panel items. On the lumber side, the CVD preliminary findings will be announced on Tuesday, April 25^th. That will likely determine the nearby direction of the commodity lumber markets as many buyers and Canadian mills have been in a standoff over the past few weeks as they wait for more information on the way this duty case will lean on the marketplace. While panels are not included in the CVD case, buyers are taking a cautious approach to buying these items as well, with what many perceive to be too high of price levels for the time of year.

Plywood Market Stalls

Lately, the plywood market seems to be in a bit of a lull, as buyers look for more direction before they make their next major move. Regardless, many are choosing to stay with their normal buying habits and only buy what they need to cover they’re immediate requirements, and nothing more. Unfortunately, one has to consider there is a high probability of a considerable amount of wood sold to the field for the next 30-90 days shipment, at levels that put the seller under water, and, in some cases, substantially under water. Those people are definitely hoping that most of the bullish rhetoric is just that, and the commodity markets will settle back to more reasonable levels. Whether that is wishful thinking, or not, remains to be seen.

Buyers Find Themselves in a Difficult Market

It does seem to be a dangerous commodity market for buyers, however, with more volatility than we’ve seen in a while. This puts buyers in an uncomfortable position that they haven’t had to deal with in a while. Additionally, demand appears to be as good as it has been in several years and most customers in viable areas have already had great starts to the year, with no letup in sight. While there is reason to be cautious or even skeptical of the markets, it can be equally dangerous to try to get in front of them. The trend is your friend.

Good Signs, but No Firm Prediction for Wood Products Markets

For lack of more information or direction, buyers will likely continue to play conservatively, with their cards tight to their chest, but as always, we will see. For now, most signs would point upward in the next 30-60-90 days. But, it’s never a slam dunk forecast either way.