September Surge...Normal
What exactly is the September Surge? It is an increase in lumber buying, reversing from summer inventory liquidation to inventory accumulation to prepare for autumn. Weather begins to improve after August’s sweltering heat and humidity-restricting jobsite productivity. Builders begin their scramble to dry in as much framing as possible in preparation for winter.
The shift in buying strategies and the increase in demand creates the September Surge, historically lifting prices higher September through October.
September Surge From Historically High Prices
There is a distinct difference between how our lumber market handles the September Surge when prices are at historical highs. Perceptively high prices can add to the rally, however real, quantifiable high price relationships have caused significant downside movement after the September Surge.
To put things into perspective. Over the past 15 years, SYP 2x4#2 has exceeded this week’s price just four times. The highest was $442 in 2004 ($42 higher.) Canadian SPF only once, also 2004 @ $470 ($85 higher). Dry Hem Fir, ditto...once, $465 ($35 higher). Green Doug Fir...Zero...2004 was $20 lower at $460.
7/16 OSB (I have more data) over the past 25 years has exceeded this week’s price of $335 only twice: 2003 @ $380 and 2004 @ $400.
From historically high prices, the lumber market has a history of declining. At that 2004 high water mark, over the next eleven weeks SYP fell $45; SPF dropped $155; Dry Hem Fir collapsed $175; Green Doug Fir eroded $185.
OSB continued to rally three more weeks after the lumber peak, up to $435, then fell $200 in seven weeks. Think on that as you prepare for the September Surge.
My play would be to cover SYP through mid October. Everything else, just fill in the gaps and give it some room.
Looking Forward ...ml
A veteran lumberman, Matt Layman publishes Layman's Lumber Guide, the weekly forecasts and buying advisories that help component manufacturers save money on lumber purchases every day. You can reach Matt at 336-516-6684 or matt@laymansguide.org.