Lumber Prices

[Muffler Bearing]

http://money.cnn.com/2010/06/08/news/economy/lumber_deflation_double_dip/index.htm

This aint good.:monkey:

Your thoughts.

 

[mtngun]

My thoughts are ....... that I wouldn't want to be working in the timber industry.

Ya, I was surprised when prices picked up last year, 'cuz construction was dead. Might have been due to demand from China. But they say China's economy is a bubble that's bound to pop eventually .........

Be curious to see what Brmorgan has to say about it, he seems to be in the loop.

 

[Muffler Bearing]

Never really understood the price jump. But was glad to see it.
My concern is I see larger lay-offs comming?
This aint good for the US.:monkey:

 

[Taxmantoo]

Yet the manufactured stuff is through the roof.
Last time I checked it was $14 for 7/16x48x96 OSB.
Hmmm, that was 3-4 weeks ago, maybe I should check again.

 

[NC4TN]

I hate to say it, but I ain't surprised one bit. The fine hardwood market here in the southern appalachians died 2 years ago when the weathy Floridians stopped buying nice furniture for their 2nd homes in the mountains. If you go to the piedmont section (Hickory, Lenoir, Winston-Salem, Burlington; "furniture towns") of NC which used to be the furniture capital of the US, it looks like the rust belt did in the 80"s. Broyhill went belly-up, so did Henredon; nothing left now but shuttered factories.

Now, all those wealthy Floridians that have 2nd homes are scared to death and are selling them for pennies on the dollar and losing their hineys. So, needless to say, the market for new homes has just quit!

It's really a shame too. All these little family operated sawmills here in the mountains are quitting. A good friend of mine that I went to high school with who has logged all his life told me last week that he didn't think he could make it to the end of the month. What furniture plants that are left only take veneering oak or ash (for flooring going to China, not furniture) now, and it has to be perfect...... just 1 or 2 days a month.

My best advice is: plant a big tater patch, grow all the beans you can put up!

 

[hdcoop72]

NC4TN ... and everyone else.... I am so afraid you are all so right on!

 

[jimdad07]

My best advice is: plant a big tater patch, grow all the beans you can put up![/QUOTE]

Very sound advice in times like this, that's what we did. Makes living healthier. Afraid we might be heading for another depression. God help us all.

 

[NC4TN]

Very sound advice in times like this, that's what we did. Makes living healthier. Afraid we might be heading for another depression. God help us all.

It sure does appear that way. You can just sense the desperation in the voice of a lot of people that I talk to nowadays. I have worked for the railroad for 30 years and I've started to notice a few more people riding the freight trains now, just like the 30's. It really weird too because it's not just mexicans hopping a ride as usual; it's people that really look out of place riding in a boxcar.

I'm not one of these doomsayers either. It's just a little bit scary; well not scary, just alarming.

I'll have lots of 'taters this year if I can keep the deer out of the patch! lol

 

[chuckwood]

beans and taters....

My best advice is: plant a big tater patch, grow all the beans you can put up!

Don't forget some good sweet corn! I've got all the beans I'm gonna be able to put up and more, they're growing in the corn. Got three long rows of taters. Not far away is a huge oak trunk laying down that I was gonna mill three months ago when it was much cooler. It's still not milled and I'm not looking forward to doing it in this heat, but I couldn't mill, I had to spend too much time behind the plow and the tiller.

 

[BobL]

Nice looking garden there chuckwood. That soil looks real rich - like it could grow Chainsaws.

 

[Brmorgan]

My thoughts are ....... that I wouldn't want to be working in the timber industry.

Ya, I was surprised when prices picked up last year, 'cuz construction was dead. Might have been due to demand from China. But they say China's economy is a bubble that's bound to pop eventually .........

Be curious to see what Brmorgan has to say about it, he seems to be in the loop.

I didn't really understand the jump to $350/fbm and above either. I had it pegged around $250, maybe $275 if other commodities picked up too. The spike did closely follow British Columbia's change to the building code which now allows full wood-frame construction up to 6 floors though; maybe it was mostly speculation and optimism.

I have read a few opinions that put lumber over $400/fbm a year from now, but that was based on improved markets in India, and more importantly, China. That doesn't seem to be materializing so prices are cooling now. Lumber was $335 when our mill restarted in mid-March; it's since lost a third of its value, so we're running on a pretty thin margin now. During that time our dollar has ranged wildly from about $0.90 USD to better than parity, which makes a big difference when lumber is priced in USD. Things are a bit uncertain, though we do have a possible contract directly with China, which would at least really help to keep us afloat if things do stay bad or get worse. They want rough 3-9/16" square posts and rough 1-3/8" X 3-9/16" boards (basically a slightly wider but thinner 2X4). I heard it's for building heavy concrete forms and the like, but that wasn't from anybody who would know for sure, so I don't know. It's a bit of a PITA for us because we're not really set up for the posts properly yet, though changes would be made if a more long-term arrangement is made. I'm not gonna gripe though, work is work right now.

One other factor here is the US countervailing/import duty on lumber from Canada. Basically, as per the agreement, as lumber prices rise, the duty rate decreases. It's an incentive for Canadian companies to not overproduce and dump product across the border to make a quick buck. It's better than the 27% nonsense we were paying half a dozen years ago, but I still think it gives American interests an unjustified amount of control over our industry. I think I mentioned this a while ago somewhere else here, but I'm not sure. Anyway, I don't remember the numbers exactly, but back in March-April, the price of lumber stayed high enough for a long enough time that the import duty was reduced from 15% down to 10%, and shortly after was even on schedule to be completely eliminated as of June 1st. I'm not sure if that actually happened or not after the price drop of the last few weeks, since that should bring the duty back into effect.

A final issue is that interest rates in Canada just rose a bit and are on track to keep rising for a while to curb deflation and stabilize the dollar. People have seen the rate hike(s) coming for a while now, which also contributed to a near 10% falloff in the housing market in Canada over the last month. I'm not up on the equivalent stats south of the border though. I'd imagine worse if anything right now.

Great site for tracking lumber prices/news/trends:
http://www.madisonsreport.com/keyprice.html