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Blog

Southern Yellow Pine Lumber Prices Hit New High in March

March 28, 2018
Author: John Greene

For some time now, the North American lumber market has been awaiting the “perfect storm” that took shape in 2017. The convergence of three major market dynamics—a lack of timber in Western North America due to the mountain pine beetle outbreak, new trade duties placed on Canadian lumber imports into the US, and a housing market strong enough to demand over 51 billion board feet of lumber in 2018—has caused supply constraints and driven lumber prices to new highs. While prices may subside and find equilibrium as we head into the spring season, supply levels continue to be a concern.

As we noted last month, Forest2Market’s southern yellow pine lumber composite recently hit its highest level ($450/mbf) since we began compiling the data over eight years ago. But the metric continues to push even higher; after cresting the $450/mbf mark, prices spiked to nearly $490/mbf in early March.

Online freight and logistics publication FreightWaves recently noted that “The bottom line is that the cost of major homebuilding materials—everything from 2x4s to OSB and plywood—are soaring. Small builders are spending more resources sourcing their materials and cost-engineering their estimates because they aren’t able to pass everything along to the developers. National builders typically have a more flexible supply chain with access to more sources, and won’t feel the impact of sky-high lumber prices as quickly, but regional and local builders are being forced to get creative.”

FreightWaves continues, “Home prices are already forecast to experience strong growth over the next decade, because the millennial generation has finally started buying single-family homes in large numbers. If homebuilding materials costs keep rising, that will accelerate price increases, potentially to the point where demand is stifled.”

While end uses for southern yellow pine lumber typically differ from much of the lumber produced in the fire-ravaged Pacific Northwest (PNW) and British Columbia, prices have nevertheless surged as supply remains tight. The composite southern yellow pine lumber price for week 10 was at $487/mbf, which is up from week 9’s price of $462/mbf. Week 10’s price is also 19 percent above its January 2018 starting point of $408/mbf, and 15 percent above the 2017 week 10 price of $425/mbf.

A closer look at some of the prices we have seen since the beginning of the year:

  • January Average Price: $427/mbf
  • February Average Price: $453/mbf
  • YTD Average Price: $449/mbf


    SYP_Mar_2018.png

    weekly lumber market report and benchmark
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