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Blog

Softwood Lumber Prices Rise as Canadian Transportation Issues Hamper Deliveries

February 20, 2019
Author: Keta Kosman

The spectacular rebound of North American construction framing dimension softwood lumber prices in early February continued as prices rose in response to transportation problems, mostly on Canadian railways. Severe weather hit many parts of Canada and the US, causing delays of shipments from softwood lumber suppliers. Customers, already low on inventory as they had been waiting for prices to come down, have been forced to buy specific items for immediate fill-in needs. Sawmills have responded by raising prices and going off-the-market on the most popular items because they didn’t want to quote too far into the future in the event that prices rise even higher.

Wholesaler prices for benchmark lumber (net FOB sawmill) commodity Western Spruce-Pine-Fir KD 2x4 #2&Btr were at US$422/MBF for the week ending February 8, an $18 or +4.5% increase from $404 the week before.  This benchmark softwood lumber commodity price is now down $96, or 19%, from the year-over-year (YoY) price of US$518/MBF. 

A brief respite from recent terrible weather, meanwhile, in several target markets helped to ratchet up demand while field inventories among customers remained lower than optimal if not outright depleted of some items. Wholesalers and distributers continued to clean out older inventory at prices lower than replacement levels, yet sawmills were frequently off market for 2x4 and 2x6 #2&Btr, and #3/Utility only to come back at boosted asking prices. Rail service in the Western US began to be a problem for everyone from producers to buyers, as pockets of cold weather exacerbated slow and late cars.

 Madisons_Feb_2019_1

SOURCE: Madison’s Lumber Reporter (www.madisonsreport.com)

 

Producers of Eastern Spruce-Pine-Fir dealt with a number of swirling factors, including delayed rail service, sporadic buying patterns, pockets of icy cold weather and yo-yoing lumber futures. Eastern Canadian sawmills were booked to mid- or late-February for the most part, while secondary suppliers often sold a little below replacement to snatch orders from hungry retailers with waning inventories.

 

Current Softwood Lumber Prices Compared to Recent and Historical Highs: Feb 2019

The below table is a comparison of June 2018 and February 2019 benchmark dimension softwood lumber 2x4 prices compared to historical highs of 2004/05:

 Madisons_Feb_2019_2

SOURCE: Madison’s Lumber Reporter (www.madisonsreport.com)

 

Madison's Lumber Reporter
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