Figure 1 summarizes pricing data gathered for Forest2Market’s weekly lumber market report, Mill2Market. For this market report, Forest2Market aggregates sales order data submitted directly by report subscribers. This figure charts weekly sales order prices from January 2010 through year to date 2012 and compares sales order data, FOB Mill on a volume weighted $/MBF basis. The prices in the figure are composite prices; they include dimension lumber, timbers and boards.
This month’s chart shows that price increased by 12.5 percent throughout the month of March. The month began $10/MBF higher than the previous month of February, at a price of $273/MBF. Sales order prices increased throughout the month with the exception of Weeks 11 and 13; in both of these weeks, prices declined by $4/MBF. The month of March ended with a price of $296/MBF.
Early in the month, sales volume remained relatively constant. In keeping with the traditional supply/demand model, however, sales volume decreased in Week 12 in response to escalating prices; in Week 13, as prices declined, sales volume picked up again.
A historical look at March reveals that the pricing trend in 2012 is similar to 2011’s, though prices are higher. March 2012 SYP lumber prices broke slightly above the $300/MBF threshold, eclipsing the March 2011 high of $288/MBF.
In both 2010 and 2011, a precipitous drop in price occurred around this time of year, following price increases at the start of the building season. (Note: In 2010, this drop was delayed by a few months, a result of the first-time homebuyer tax credit.)
Did we see prices reach their pinnacle for 2012 during Week 12? Will they continue to increase in the coming weeks or will Week 13 mark the start of the annual price drop?
Where do you think prices are headed? Let us know by commenting on this post.
For Mill2Market, Forest2Market collects 100 percent of all transactions—both sales orders and invoices—from 100 percent of all its subscribers. All prices are reported not as simple averages, but as volume weighted averages. For instance, if one order included 10 MBF at $260 and another included 100 MBF at $280, instead of reporting the average price at $270, Forest2Market would report the volume weighted price, which is calculated as follows:
($280 ×100 MBF)+ ($260 ×10 MBF)/110 MBF =$278/MBF
Using this method, Mill2Market provides an analysis of the southern yellow pine market in two ways:
For more information, visit the Mill2Market page of our website.
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What happened to your 2011 forecast for a double-dip in GDP by the end of 2011?
[...] do you think prices will go in the next month? Will they continue to push higher, or will the price drop we discussed in March begin to unfold? Let us know what you [...]