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Blog

North American Softwood Lumber Prices Continue to Drop

August 09, 2018
Author: Keta Kosman

Canadian sawmill operators have determined their current inventories and supply in the pipeline against the immediate needs of end-user customers in the US. The recent supply uncertainty and cries of “where is my wood?!” have been resolved and, with just a few interruptions, wood is flowing once again across North America.

A looming long weekend in Canada has folks more motivated to get business done and get off to a vacation spot than to haggle over a small amount of wood they might need for immediate fill-in. Some sawmills in western Canada claimed two-week order files but ended up settling at a good price. Most operators agreed that the extreme price volatility of the past few months is likely behind us.

 

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Current Softwood Lumber Prices Compared to Recent and Historical Highs

Despite a shortage of lumber buyers—who are likely vacationing—and scorching temperatures at jobsites, lumber futures remained resoundingly negative last week. Producers have been holding enough inventory to reduce prices based on customer counter-offers, which have quickly driven prices down over the last several weeks. As has been the case over the last year, futures responded with a fierce correction that provided no real insight into actual lumber prices.

In Quebec, the usual summer holiday break will be over soon and sawmill and forest operators in the region will get back to work. An increase in supply is expected as a result, especially since there is still a full month of production time before the Labor Day weekend—otherwise known as the “beginning of the end for lumber demand” as we head into the fall and winter seasons.

Sawmills are reporting well-stocked log decks, but log supply interruptions are possible in British Columbia (BC) as wildfire season really kicks in to high gear. However, regional operators are accustomed to dealing with this summer situation and have planned their timber procurements accordingly. Terrifying wildfires in California do not bode well for the west coast—in both BC and the US—as a second heat wave has taken hold of the region; a number of lightning strikes started forest fires in the last week alone.

The table below is a comparison of June 2017 vs. July 2018 prices for benchmark dimension softwood lumber; 2x4 prices compared to historical highs of 2004/05:

 

 Current Softwood Lumber Prices Compared to Recent and Historical Highs: August 2018Keta_Aug1SOURCE: Madison’s Lumber Reporter

 

Western and Eastern Spruce-Pine-Fir vs Southern Yellow Pine KD 2x4 5-Years: July 2018 Keta_Aug2

 SOURCE: Madison’s Lumber Reporter

 

Learn more now about Madison's Lumber Reporter.

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