When flipping around in trading ranges in the $300s, planning for the coming year had some sort of definable “worst case scenario” contingency plan. I’m just curious. How do you plan for next year, staring down the barrel of all-time high lumber prices and short supply? That depends on whether you are making it or somewhere in the chain of handlers between the producer and final use.
My rule of thumb motto for planning is, “Pain always lasts longer than hoped for, and pleasure is too short.” Ungrateful, eh? Not so fast, I said planning, not what is expected. I expect improvement.
So if I’m planning for everyday into the future, I’m planning that tomorrow might be the average of the past 5–7 days. Let’s say Mon–Wed were phenomenal off the chart days with 10 out of 10 stars, Thursday was an average 5-star day, so going into Friday with 35 stars on the good-weekend side of the scales...could go one of three ways.
- You get fired or served papers. –50 stars. Wiped out. Justifiable bad weekend. Horrible next day at work.
- An average day. A smidge disappointing effort. 0 stars. Average weekend. Kinda’ disappointing. Apathetic Monday carry over.
- OR Another 10-Star Day. Great weekend 100% and off to the races Monday morning.
It’s attitude. Plan for a Grand Finale. Do what you have to do to end this mayhem on a proverbial Friday-with-a-great-weekend-coming. Moral of the story, do not worry about things out of your control or sphere of influence. How do we plan for 2 weeks, 6 weeks, or 6 months? One day at a time...from now through the time the product will be available for you to sell is the ONLY time period to be concerned with. Right now is a free-for-all. My caution to you is to not be caught with too little product. Like musical chairs. Every time the music stops, someone has no chair. That is not you. Finish strong.
$1500 2x4s...Why Not?
It is a great privilege to be able to participate in this lumber market, be totally invested in it for a career, and advise you on how and when you should make multi-million dollar decisions. It is not lost on me the difference between what you and I do every day. When I make suggestions and forecasts, I try to feel the burden of being wrong. (That is likely why I get very defensive when missing a market.) The risks you take are staggering. So, it is with my highest possible level of confidence that I give you this week’s forecast.
On September 17, I heard four selling prices for Canadian SPF-W 2x4#2 8-20 tallies that day...$920 (ironically the best quality mill), $950, $1040, and $1075...$155 spread for the same item in the same geographic vicinity. SYP ranged from +$10 to –$100 on its basket of offerings.
Producers are aware that buyers are resisting prices and purchasing less, and it is not a seasonal change. It’s too early for that. Mills are trying to get prepared for what’s coming at them next...the wall of orders and a chance to sell out 2020 production at $700–$1000. Mills want a smaller order file to entice buyers.
Our lumber market was making a slow turn over the first two weeks of September, but in week #38 was the first significant change of course and it brought no surprises. Discounts on mill over-runs were as much as $100 lower and token anticipatory offerings of –$20 to –$50 were common, even on 2-week shipment.
Once again we have a 2020 first. Producers are getting in front of a price correction. It is very likely that mills, collectively, begin discounting prices before they lose order file. The market is going to take back a chunk of the last $500. Might as well give it willingly and get it over with.
This is not a 180 turn. It is a lane change. Expect to see significant price reductions as mills probe for the buyers’ trigger points. I would not be surprised to see $300 down in two weeks, not to move excesses, rather to keep order file. Buyers need to seriously focus on lumber and be ready to pounce.
There is not enough production to catch up and keep up with demand through year end. Mills will be buying order file over the next 2–3 weeks. Buy the price not the shipment. There will not be much quick wood sold before new highs are in the sights again.
Looking Forward...ML
Are you fed up with being caught on the wrong side of the market...losing orders because your lumber prices make you uncompetitive. I can assure you the orders you lose are not because the other guy is selling at a loss. It’s not you or your buying style. It’s just timing. I forecast when the Lumber Market will rise and fall. No one else tells you months in advance when prices will reverse....no one! Call me 336.516.6684. www.laymansguide.info