Here is the market update for the week of May 17, 2013. Information is provided by Madison’s Lumber
Despite a tiny price increase on benchmark Western Spruce-Pine-Fir KD 2x4s, the week of May 17 proved difficult for dimension lumber traders across North America, writes Keta Kosman in Madison’s Lumber Reporter http://www.madisonsreport.com/
The recent downward price correction for all major lumber and panel commodities is showing signs of slowing.
However, logistical problems remain, specifically in transportation and timber sourcing. Flooding across parts of British Columbia this week as heavy rain and rapidly warming temperatures, combining to bring water levels on the Fraser and other major rivers dangerously high, caused only more stringent transportation and logging difficulties.
The BC River Forecast Centre indicated later in the week that the worst of the danger had passed for the communities affected by high water and seasonal flooding. The spring freshet, meanwhile, on the mighty Fraser River did indeed confound cedar producers as logs from that species are typically expected to start coming downriver at this time of year.
This hearty species of lumber producer, the cedar mills, are accustomed to temporary difficulties as the spring season really comes on, and this year is no different.
This week, the lumber futures contract for May expired. In itself that was rather a non-event as almost all trading has been in the July contract for a couple of weeks. However the continued extremely bearish indications out of the futures board are not sitting well with lumber producers as well as those buying and selling in the cash market.
This week, WSPF KD 2x4 #2&Btr rose $1 to US$341 mfbm. Other commodities, including western studs, continued their recent weeks-consecutive drop, although to a much smaller degree. Green Douglas fir 2x4s, a specialty item favoured by home builders in the US northeast and California, actually picked up $10 in price, ending the week at US$340 mfbm.
Canadian lumber traders reported concern that customers from China are taking more than on giant step back. Sawmills and exporters in BC told Madison's Thursday during the weekly market survey that customers in China not only were absent from open-market transactions but that China may also be looking to pull out of some contract business already agreed-upon for June and July.
If so, this will be the first time since China became a serious player in the North American lumber market in 2010 that export volumes to that country would drop significantly.
Another disturbing development this week, and it is hoped a very short-lived one, was the sudden appearance of low-grade western dimension lumber in eastern Canada as WSPF traders tried to conserve some recent sales momentum. That wood is now displacing sales of ESPF in a frustrating way.
The sizable increase in US new housing permits this week does bode well for this coming building season south of the border. Lumber producers and sellers across North America this week clung desperately to this one ray of hope that solid wood commodity prices would soon find a floor.
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Madison's Lumber Reporter