Random Lengths North American framing lumber composite climbs US$6 to US$279/mbf, but sales activity slows on weakness in futures market in run-up to expiration of January contract
January 15, 2012
– The Random Lengths framing lumber composite gained US$6 (2.20%) in the week ending Jan. 13 to reach $279 per thousand board ft (mbf), but it is $26 (8.52%) lower then the price reported in the same week last year of $305/mbf.
Last week's biggest gains were seen in Southern pine markets, where upward price momentum gathered pace on most #1 and #2 dimension items, Random Lengths reported. Prices generally moved $15-$20 higher, but increases of up to $35 in #2 2x12 were reported on the Westside.
The reported price of KD Southern Pine (Westside) #2x4 Random moved up $8 (2.78%) to $296/mbf after holding at $288/mbf in the previous two weeks. Compared to last year’s level ($317/mbf), the price is $21 (6.62%) lower.
Western SPF sales activity, which had been steady in the week ending Jan. 6, fell back last week, but mills held firm on price. Weakness in futures markets undermined buyers’ confidence, particularly on Thursday when futures for March delivery reached a new contract low.
The reported price of KD Western SPF #2&Btr 2x4 random dropped $2 (0.77%) to $259/mbf after two weeks at $261/mbf, and was $50 (16.18%) lower than the price reported at this time last year of $309/mbf.
Lumber futures dropped by up to $6.60/mbf on Monday but rebounded on Tuesday, when the January contract closed $2.60 higher at $249.90/mbf. Further declines followed on Wednesday, when January dropped $3.30 and March lost $7.50 to close at $243.40/mbf.
March futures reached a new contract low on Thursday, falling $7.10 to close at $236.30/mbf – a decline of 14.5% from a three-month high on Dec. 29. But January gained $4.40 to close at $251/mbf.
On Friday, most contracts closed sharply higher as traders exited short positions and new buying interest developed in expiring January which closed down $0.60 at $250.40/mbf. March gained $9.40 to settle at $245.70/mbf and May closed up $8.40 at $260.40/mbf.
Eastern SPF sales also slowed as buyers digested their purchases from the week before and watched futures prices. The reported price of KD Eastern SPF (delivered Great Lakes) #1&2 2x4 random held at the previous week’s level of $347/mbf, but was down $48 (12.15%) from the price a year ago ($395/mbf).
Douglas fir sales continued at the previous week’s accelerated rate and remained better than mills expected given the time of year. This was partly due to an increase in direct purchases from mills because distributors’ inventories were lighter than usual.
The reported price of green Douglas fir (Portland rate) Std&Btr 2x4, which gained $8 in the week ending Jan. 6, moved up another $7 (3.26%) to $222/mbf. This was $53 (19.27%) below the price reported at this time a year ago of $275/mbf.