1 min read

Southern Yellow Pine Lumber Prices Volatile in November

Southern Yellow Pine Lumber Prices Volatile in November

Southern yellow pine lumber (SYP) prices demonstrated relatively flat performance throughout October. As a reminder to just how fast the market can change, however, prices then went haywire in November and have demonstrated significant volatility on the heels of the NAWLA conference.

Forest2Market’s composite SYP lumber price for the week ending November 15 (week 46) was $341/MBF, a 1.2% increase from the previous week’s price of $335/MBF, but an 8.6% decrease from the week before that. Prices have decreased incrementally by quarter during 2019:

  • 1Q2019 Average Price: $410/MBF
  • 2Q2019 Average Price: $379/MBF
  • 3Q2019 Average Price: $361/MBF
  • YTD Average Price: $379/MBF

 

SYP_week46

A more detailed look at price performance since the beginning of 2019 demonstrates some periods of increased volatility but more importantly, a steady decreasing price trend. The trend line since January is flanked by both peaks and valleys, however, the descending movement is apparent.

 

SYP_Trend_2019

 

Outlook

As we noted last month, the lack of price movement during October seemed to reflect the general apprehensions in the market as a series of economic and political factors intensify a sense of uncertainty. The surprise rate cut by the Federal Reserve in late September combined with a flagging US manufacturing index, which fell to 47.8% for September (its lowest level since June 2009) suitably illustrate the global market tension as we approach the end of a decade that has experienced significant and steady growth.

Joe Davis, global chief economist and head of investment strategy at Vanguard, is skeptical about the near term performance of global markets, which would impact the larger housing sector and future lumber/panel demand. “In the year ahead, we don’t foresee a significant reversal of the [U.S.-China] trade tensions that have occurred so far. And with continued geopolitical uncertainty and unpredictable policy-making becoming the new normal, we expect that these influences will weigh negatively on demand in 2020 and on supply in the long run.” Davis believes US growth will slow to roughly 1 percent next year, and China’s growth performance will also be below trend.

These jitters seem especially poignant ahead of the upcoming election year, which is shaping up to be unusually contentious. If the economy stays the course and housing starts keep chugging along through the peripheral noise, however, SYP demand could keep southern mills busy in the interim.

Benchmarking for success with Sawmill TQ