Random Lengths North American framing lumber composite advances US$5 to US$327/mbf, average for July of US$321/mbf is 18.9% higher year-over-year

Wendy Lisney

LOS ANGELES , July 29, 2012 (Industry Intelligence Inc.) – The Random Lengths North American framing lumber composite climbed US$5 (1.55%) in the week ending July 27 to $327 per thousand board ft. (mbf). This was $54 (19.78%) higher than the price reported at this time last year of $273/mbf.

For July as a whole, the composite averaged $321/mbf, down $9 (2.73%) from the average in June of $330/mbf, but $51 (18.89%) above the price in July 2011 of $270/mbf, according to Random Lengths data. The yearly average for 2011 was $272/mbf, $12 (4.23%) lower than the average in 2010 of $284/mbf.

Framing lumber trading remained active, although slowing construction due to high temperatures and declines in lumber futures prices encouraged some traders to step back and digest recent purchases, reported Random Lengths.

Lumber futures weakened from Tuesday, with drops of up to $3.10 in the November contract on Wednesday as traders reacted to U.S. Commerce Dept. data showing an 8.4% decline in new home sales in June from May’s two-year high. June new home sales were reported at 350,000 units, the lowest for five months and well below analysts' predictions of a gain of 1.6%.

More disappointing housing data on Thursday showing a 1.4% month-on-month decline in pending home sales to 99.3 in June accelerated the declines, with September closing $8.90 lower on Thursday at $282/mbf and November dropping $3.80 to $280.70/mbf. January fell $7.50 to $286/mbf.

On Friday, prices regained some of those losses on broad gains in stocks and most commodity sectors, according to a commentary by Dow Jones. Comments by European Central Bank President Mario Draghi on Thursday that he would do whatever was necessary to protect the Eurozone from collapse also helped to reassure investors.

September closed the week up $4.30 from Thursday at $286.30/mbf, November advanced $3.10 to $283.80/mbf and January settled $5 higher at $291.00/mbf.

In last week's Western SPF trading, some prices continued to gain on momentum from the previous week, although most of the action was seen early on. Sales at mill level quietened, but most mills reported enough activity to book orders on 2x4 and 2x6 into the first or second week of August.

The reported price of KD Western SPF #2&Btr 2x4 climbed $5 (1.69%) to $300/mbf from $295/mbf in the week ending July 20, and was $44 (17.19%) higher than the price reported at this time last year of $256 /mbf.

Eastern SPF prices moved higher on steady demand and reduced production as a result of shutdowns. Producers booked order files into the week of August 13 and reported solid sales, particularly into U.S. markets, reported Random Lengths.

The reported price of KD Eastern SPF (delivered Great Lakes) #1&2 2x4 climbed $7 (1.75%) to $408/mbf, and was $69 (20.35%) higher than the price reported at this time last year of $339/mbf.

Southern pine sales were particularly strong, even though treaters and dealers attempted to hold back, hoping for month-end downward price pressure which did not materialize. As inventory gaps opened, they were forced to accept current prices, and gains of up to $10 on most #2 dimension prices were seen on the eastside, Random Lengths reported.

The reported price of KD Southern pine (Westside) #2 2x4 climbed $4 (1.23%) to $329/mbf – up $57 (20.96%) from the price a year ago of $272/mbf.

In Douglas fir markets, sales moved at a faster rate than dry markets, supporting solid price gains. Mills were booked up to three weeks ahead, and some said they could sell more if they had the wood to offer, reported Random Lengths. The price of Green Douglas fir (Portland rate) Std&Btr 2x4 advanced $13 (4.78%) to $285/mbf - up $37 (14.92%) from the price reported at this time last year of $248/mbf.

Since June 29, the price of Green Douglas fir (Portland rate) Std&Btr 2x4 has climbed $40 (18.75%) from $240/mbf.

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