Random Lengths framing lumber composite drops US$5 to US$255/mbf; demand weak across all species, inching prices down

LOS ANGELES , October 30, 2011 () – The Random Lengths framing lumber composite has dropped $5 (1.92%) to US$255 per thousand board ft. (mbf), down from $260/mbf in the week ending Oct. 21. Compared with the price reported at this time last year of $260/mbf, the composite is $5 (1.92%) lower.

Demand was weak across all species, leading to modest drops in many prices, reported Random Lengths. Prices of wide dimension were most vulnerable to counters, but most producers kept discounts in a $5-$10 range.

In Southern pine markets, 2x4 delivered the greatest resistance to price cuts, and the reported price of KD Southern Pine (Westside) #2x4 Random dropped $3 (1.09%) after holding at $271/mbf in the two previous weeks. The price on Friday of $274/mbf was $7 (2.65%) higher than the price reported at this time last year of $264/mbf.

In Western SPF markets, trading picked up on Wednesday and into early Thursday as some buyers stepped in to cover shorts. Producers pushed sales of #2&Btr 2x4 to $230 or higher from Thursday once prices had fallen to the low $220s.

The price of KD Western SPF #2&Btr 2x4 random was reported at $229/mbf on Friday, a drop of $7 (2.97%) from the week before, and $25 (9.84%) below the price reported a year ago of $254/mbf.

Lumber futures, along with many commodity markets, were affected by last week’s summit held in Brussels to resolve Europe’s debt crisis. A meeting scheduled for Tuesday, ahead of the summit, was canceled, and this created uncertainty about whether a solution would be reached by the Wednesday deadline.

Europe was not the only issue on traders’ minds as they withdrew to watch market developments. Limited lumber demand in the U.S. also continued to cause concern. November futures dropped $2.80 on Tuesday and a further $0.40 on Wednesday to $220.30/mbf. The January contract settled $5 on Tuesday, but closed $3.30 higher on Wednesday at $233.50/mbf.

European finance ministers agreed a rescue package for the Eurozone in the early hours of Thursday morning increasing the European Financial Stability Facility to €1 trillion, and requiring European banks to raise €106 billion.

Following the agreement, futures moved generally higher on Thursday and Friday. The largest gain of $4 was seen on Thursday in the January contract which closed at $237.50/mbf before moving higher again on Friday to finish the week at $239.30/mbf. The November contract gained $2.80 on Thursday but slipped back $0.30 on Friday to end the week at $222.80/mbf.

Eastern SPF producers reported a quiet week, with only a few pockets of activity, but most prices slipped early and ended it either flat or down, reported Random Lengths.

The reported price of KD Eastern SPF (delivered Great Lakes) #1&2 2x4 random edged $1 (0.31%) lower to $318/mbf, and was $17 (5.07%) below the price reported at this time last year of $335/mbf.

Douglas fir prices weakened, and buyers held back as they watched the market to see where price levels would bottom out. Some mills took a more aggressive approach to pricing, but had to reject the sharp counters offered by most customers.

The reported price of green Douglas fir (Portland rate) Std&Btr 2x4 dropped $8 (3.56%) to $217/mbf - up $27 (14.21%) from the price reported a year ago ($190/mbf).

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