Random Lengths framing lumber composite climbs US$4 to US$380/mbf on May 16 but sales slow from midweek as traders react to weakness in lumber futures; May contract drops US$16.70 over week to expire on May 15 at US$322.10/mbf

LOS ANGELES , May 18, 2014 () – The Random Lengths framing lumber composite advanced US$4 (1.06%) in the week ending May 16 to $380 per thousand board ft. (mbf), and was $6 (1.60%) higher than the price at this time last year of $374/mbf, Random Lengths reported in its weekly lumber market report.

In dry framing lumber markets, sales activity weakened, but prices still finished the week-firm-to-higher. Douglas fir demand remained slow, and producers lowered prices on some items.

Weakness in lumber futures impacted sales from Wednesday. In Western SPF markets, sales activity fell back as traders reacted to a $5.20 drop in the May contract ahead of its May 15 close, and was virtually non-existent on Thursday, reported Random Lengths.

The May contract opened the week’s trading on May 12 at $338.80/mbf and fell in small increments of $1.00 and $0.50 on Monday and Tuesday. Wednesday’s $5.20 drop reduced the settlement price to $332.80, and the contract expired at $322.10/mbf on Thursday after losing $10.70 on the day. For the week as a whole, May futures dropped $16.70 (4.93%), and July futures, which opened the week at $342.80, closed down $18.60 (5.43%) at $324.20/mbf.

Random Lengths noted that some Western SPF buyers secured coverage through the futures board, while traders in the cash market stayed on the sidelines late in the week. Some mills with sales booked into June leaned on order files, but there was talk that mill inventories were building as car shortages eased, allowing more volume to enter the U.S.

The reported price of KD Western SPF #2&Btr 2x4 edged $1 (0.29%) higher to $347/mbf, and was $15 (4.52%) over the price reported a year ago of $332/mbf.

Eastern SPF sales followed a similar pattern to Western SPF, and fell back by Thursday after a firm start to the week. The week’s lower sales volume was attributed to digestion of purchases from the previous week and weakness in lumber futures. Mills continued to face transportation delays and held firm on floor stock prices.

The reported price of KD Eastern SPF (delivered Great Lakes) #2&Btr 2x4 random ended the week $4 (0.92%) higher at $440/mbf, and was $5 (1.15%) above the price reported at this time last year of $435/mbf.

Southern pine sales were moderate, with #2 2x8&wdr showing the most consistent price gains, reported Random Lengths. Production was heavy to the narrows as a result of a limited supply of larger logs because of wet weather. #2 2x4 gained in double digits on the eastside and in the central zone, and some buyers filled gaps in #2 loads with purchases of #1 2x4.

The reported price of KD Southern Pine (Westside) #2 2x4 advanced $4 (1.03%) to $393/mbf, and was $3 (0.77%) higher than the price reported at this time last year of $390/mbf.

Douglas fir demand was lackluster, particularly in California, and this led some producers to soften prices of the narrows of Std/#2&Btr dimension, reported Random Lengths. Portland-rate mills often offered single-digit discounts on 2x4 and 2x6, but #1&Btr 2x4 generated more interest than #2&Btr and sales increased to a $375-380 range.

The reported price of green Douglas fir Std&Btr 2x4 dropped $3 (0.91%) to $327/mbf, and was $12 (3.54%) lower than the price at this time last year of $339/mbf.

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