The last four weeks have been solid for western plywood sales. We’ve sold over production each week. Prices during this period have gained at least 10% – which is welcome news for mills.
As strange as it may sound, the past month has been our best stretch of sales in almost a year, and it’s only halfway through the month. Our order file is creeping into March as of this writing, and by the market’s performance during this time, we’d say that demand is better than most have expected.
Things could change down the road with all the uncertainty in the economy due to interest rates and inflation, but the commodity business is usually a three-to-four-weeks-and-sooner kind of business. And for the moment – the near term – things look good.
The second half of 2022 was dreadful for commodity lumber and panels, as interest rate hikes, inflation and dire economic predictions weighed heavily on the industry. Almost all buying sectors pulled back and inventories were pared down to the pavement in many areas. And the markets reflected these realities.
When we entered 2023, a combination of low inventories, low prices, decent demand, and production cutbacks at sawmills spurred the recent, but modest, surge in commodity lumber and panel prices in January. So far, we continue to see this trend in February as well.
To be clear, buying has been uneven throughout these weeks, as slow sales days and good sales days are usually in the weekly mix. Buyers remain cautious and there are no indications that they are buying more than they need. If current demand levels persist into spring, and buyers remain cautious in their purchasing, our markets could be sustained at current levels or better.
Are we seeing a resurgence in homebuilder sentiment, as some have noted? Mortgage rates have fallen off of their highs, which spurred an increased buying interest recently. All things that will bear watching in the next few months. Stay tuned for another interesting ride in commodities this year.
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