Prospect of year-end curtailments supports US$3 week-over-week gain in Random Lengths North American framing lumber composite to US$266/mbf; November average was US$257/mbf

Wendy Lisney

LOS ANGELES , December 4, 2011 (Industry Intelligence) – The Random Lengths framing lumber composite climbed US$3 (1.14%) in the week ending Dec. 2 to $266 per thousand board ft. (mbf), but remains lower than the price reported at this time last year ($273/mbf) by $7 ($2.56%).

For November as a whole, the framing lumber composite averaged $257/mbf, down $3 (1.15%) from the average in September of $260/mbf, and $18 (6.55%) lower than the price in November last year of $275/mbf, according to Random Lengths data. The yearly average for 2010 was $284/mbf, $62 (27.93%) higher than the average in 2009 of $222/mbf.

Southern pine sales were steady for some producers early in the week, but fell back as the week progressed, reported Random Lengths. Despite a growing tone of caution in the market, #2 dimension prices increased by up to $5, and the reported price of KD Southern Pine (Westside) #2x4 Random moved up $2 (0.69%) to $291/mbf. This was $23 (8.58%) higher than the price reported this time last year ($268/mbf).

Western SPF trading followed a different pattern, with sales firming towards the end of the week after a quiet start. Buyers were cautious on expectations of reduced consumption in the run-up to the year-end holidays, and weakness in futures.

The reported price of KD Western SPF #2&Btr 2x4 random held at the previous week’s level of $239/mbf – down $21 (8.08%) from the price reported at this time last year of $260/mbf.

Lumber futures prices fell sharply on Tuesday to 2 ½-week lows, due partly to disappointing home price data for September. The S&P/Case-Shiller index showed lower prices in 17 of the 20 cities surveyed, undermining traders’ confidence and sending the March contract down by the US$10 daily limit to $241.90/mbf. January dropped $8.60 to $223/mbf.

On Wednesday and Thursday, futures showed signs of stabilizing, but did not make back Tuesday’s losses. January dropped $4.80 on Wednesday and settled at $219.60/mbf on Thursday after edging up $1.40. March closed at $241.40/mbf on Thursday.

Rising cash prices and a broad midweek rally in commodity prices supported a rebound in futures on Friday. January climbed $7.40 to close the week at $227/mbf, March gained $1.10 to settle at $242.50/mbf and May gained $5.50 to close at $258/mbf.

Eastern SPF trading slowed last week, but prices of #1&2 either held or moved modestly higher and mills resisted counters, preferring to lean on order files boosted by imminent holiday curtailments.

The reported price of Eastern SPF (delivered Great Lakes) #1&2 2x4 random climbed $4 (1.23%) to $330/mbf, but was $25 (7.04%) lower than the price reported a year ago of $355/mbf.

Trading in green fir was quiet but limited supplies helped to keep prices firm, and mills were able to turn away counters on the basis of solid order files and the prospect of further curtailments over the Christmas and New Year period.

At Portland-rate mills, the reported price of green Douglas fir Std&Btr 2x4 was $230/mbf on Friday, up $5 (2.22%) from the previous week, but $5 (2.13%) below the price reported at this time last year of $235/mbf.

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