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Lumber prices have been trending down recently, in large part due to weaker demand on the market, according to recent reports from Madison’s Lumber Reporter and the NAHB.

In the week ending June 28, the price of Western Spruce-Pine-Fir 2x4 #2&Btr KD was $346 per thousand board feet, said forest products industry price guide newsletter Madison’s Lumber Reporter. This is down 3% from the previous week and 10% from a month ago. Compared to the same week last year, the price for the week ending June 28 was down 21%; two years ago, the price for Western Spruce-Pine-Fir 2x4 #2&Btr KD was $630 per thousand board feet, according to Madison’s Lumber Reporter.

An NAHB analysis for lumber prices for the week ending June 21 indicates framing lumber prices are down double-digits year-over-year while lumber futures prices were down nearly 20% compared to the prior year.

“For the time being, customer demand is served promptly by sawmills and lumber manufacturers; however if there is a bounce—even a small one—in sales of wood, either for new home building or for reconstruction after storms, shortages will appear almost immediately,” says Keta Kosman, publisher of Madison’s Lumber Reporter. “Should this happen, anyone caught without wood they need for ongoing projects could be facing quite a price shock.”

Kosman says, in general, since mid-2022 builders and lumber buyers have been “extremely cautious” in their purchasing of manufactured wood products for fear of stocking up on inventory should prices fall significantly to more historic levels.

“The fact is, that since 2020 to 2022 there is a new floor, and lumber prices will never return to what were the lows in 2010,” Kosman says. “This is because the cost-of-production for sawmills has essentially doubled in the past five years. The ongoing uncertainty of macroeconomic conditions nationally and warfare globally is doing nothing to restore confidence.”

Kosman says recent announcements of sawmill curtailments are not likely to improve sentiment toward the lumber market. Additionally, while the most recent housing starts data was down slightly month-over-month and year-over-year, the total number of starts year-to-date is essentially in line with last year, Kosman says.

“The generally stable trend line of the most commonly-traded lumber items during [the same time] confirms this steady march of new housing construction,” Kosman says. “As both Canada and the U.S. go into their respective national holidays, and annual summer breaks arrive, many question if there will indeed be any significant volume of lumber sales this year at all.”

Kosman says in the first quarter of 2024, Canadian lumber production and manufacturing sales were almost flat relative to the same period in 2023. Canadian lumber exports to the world during the period from January to March 2024 were up almost 10% year-over-year, with Canadian exports to the U.S. up by 11%.

U.S. Lumber Production in Recovery

Kosman says lumber production in the United states is recovering from lows in the early part of last year but Canadian volumes—a significant source for the U.S. market—are still down. In the full-year 2023, U.S. sawmills produced 37,271 million board feet, 1.2% lower than 2022; In Canada, sawmills were 6% less productive in 2023, producing 21,423 million board feet. Comparing to the last “normal” year—2019—U.S. lumber production volumes were 35,219 million board feet and Canadian volumes were 24,432 million board feet.

“In the U.S. Pacific Northwest and in British Columbia, the sawmills are having difficulty accessing fiber and are facing continually rising costs, all while lumber markets remain soft,” Kosman says. “British Columbia’s timber harvest has plummeted from 65 million cubic meters in mid-2016 to just 32.5 million cubic meters at the end of 2023. The outlook for the BC timber harvest in 2024 is below 30 million cubic meters.”

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