LUMBER MARKET – September, 2020
- As demand remains strong, mills control this market with sold-out production well into October
- Very little quick shipping wood available from mills, with lumberyards and distribution yards thin on inventories
- 21-week run continues of record lumber increases, but tone beginning to change as some buyers pause and digest
- Futures market for November trading at down limits – indicating an expectation of significant price drops by then.
- OSB prices 3X over last year, expected to rise through September.
- Commodity market is case study for Economics 101: Low Supply + High Demand = High Prices
It’s been all over the news – Record Lumber Prices!
Unexpected high demand and supply disruptions in these crazy times have caused budget concerns for all our builders and remodelers. We are working overtime with our buying group, LMC, to ensure our yard is full of the inventory that you need, when you need it. Certainly not an easy task as dealers across the country are scrambling with out of stocks and delivery delays, sometimes up to two weeks as they await shipments.
OTIF High at Davis-Hawn. We have been very pleased with our ability to maintain high OTIF (On-Time, In-Full) results through this pandemic, but lumber price control is simply another story. The prices from the mills are literally through the roof, even with our billion dollar buying power and 100+ traders at LMC working for us.
Any End in Sight? As mentioned in the bullet points above, prices in our commodity industry are extremely sensitive to imbalances such as this in supply and demand and as a result they have soared past all-time records. No, it probably won’t last through the winter, but no one knows when it will return to “normal” or how quickly that drop will occur.
Strategies for Saving on Lumber Costs. So what can you do in the meantime? How can you try to reign in this line item in your budget? We mentioned in our August newsletter some ideas regarding product substitutions or choosing lower grades, but that runs the risk of negatively impacting your quality.
Here are a couple of blogs from years’ past that discuss a number of management tactics and strategies you can employ now to reduce waste and save money on your jobsites.
- Hidden Value of a Lean Framer
- Wasted Away Again
- How to Find the Lowest Cost Lumberyard
- Now Let’s Build
When lumber gets priced like gold, there has never been a better time to implement some of these “Lean” practices on your projects to achieve real savings.
Thanks for your patience and understanding during these challenging times in our industry. Hopefully, lumber supply will catch up to this soaring demand soon and lower these prices back to expected levels.
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