Out of three lumber sources interviewed in the Southeast, two report a beginning of a downturn in the market, and the other reports continued booming sales. A source who works in Louisiana and Arkansas (with sales to Texas) said, “It’s starting to slow down in the last week. It’s gotten to the point where it’s started to drop off. It was going full-steam since March/April, and it was putting up record numbers. Everyone was wondering when it was going to correct, and it’s started to correct. And it’s correcting hard. It was inevitable; it was expected. So, as of today, that’s what’s happening. There is still a good amount of usage, but a lot of companies are leaning their inventories because of the time of year that we’re going into and because of the prices dropping. So, instead of keeping a month on hand, they’re only keeping a week or two weeks on hand.”
Asked to compare the market at the time he was interviewed with that of six months earlier, he observed, “Prices are still good, but they’re trending downward. When COVID started, prices started rising. You still have great prices, but they are trending downward. We’re just on the top of the downhill slide here.”
His business offers Southern Yellow Pine in No. 1, No. 2, No. 2 prime, No. 3 and No. 4. Sales of these items go to many types of businesses, “everyone but wholesalers,” he remarked. He said these organizations are “still steady and busy. The home center business is still good. It’s not as great as it was, but it’s still good. It’s hard to gauge from this year because of the way things have been. The usage has just been through the roof, especially at the home centers with everyone home. It’s been tough to gauge on the usage part of it. You still have workers out there pouring slabs, but contractors are holding up on getting lumber, because they know the prices are coming down. There’s an anticipation of jobs still to be done from being backed up from COVID. At one point, lumber was hard to find. Now it’s too expensive and prices are dropping off, so everyone’s just waiting until they absolutely need it.” Transportation is not a problem, he said.
A Mississippi lumber provider, who sells to customers in about 40 states, observed that, “The Southern Yellow Pine market is in a free fall. We’ve had a record run for about six months. Virtually every item produced in Pine, dimension lumber, timbers, plywood, OSB, any product, any grade were at record highs until recently. So, at some point, the market was going to have to adjust and it’s beginning that now. So, what the market was two weeks ago is not what the market is today, and certainly, a month from now the market won’t be anywhere near where it is now in pricing. People are basically waiting and watching for the market to settle somewhere. Everybody’s got an opinion about how far the market is going to fall. But everybody agrees that it’s got to adjust. My opinion is that somewhere between now and the end of the year, prices are going to fall to about where they were before the market started its run, around the first of April. I don’t wish that. I just don’t think there’s anything that can sustain the pricing structure that we got, that was really a perfect storm of a lot of events that led to this long price run.”
Asked if the market was better or worse compared to six months ago, he said, “It’s worse. The first of April, the market was beginning its upward trajectory. Demand was strong. It was the best building time of the year and mills had low inventories of logs and lumber. The market was very good for the producer and for everybody else. Customers realized the market was rising, so they went ahead and purchased. If you buy today, it would be cheaper than in a week or two. That scenario has existed for six months. But now, going in the other direction, nobody is buying anything they don’t need right this minute. That’s going to slow purchasing and there will be surpluses at the mill level.” That, he said, will affect prices. “The market is much worse, so to speak, than it was six months ago,” he observed.
This lumber provider offers Southern Yellow Pine, a great majority of which are low-grade timbers and dimension, as well as hardwoods. He sells to retailers and truss manufacturers, mostly industrial customers. “For the most part, their business is good,” he said. “The word we’re hearing from our customers is they’re expecting a very good year in 2021. So, we’re anticipating 2021 to be a good rebound year for us.” Transportation is not a problem, he observed.
In Alabama, a lumber provider was the exception among those interviewed, giving a consistently robust picture of the market there. “Our market has been very steady,” he stated. “We’re quite busy. We would probably be busier if we had a decent supply of material at realistic prices.” Compared to six months earlier, “Our profit is better,” he noted, “but our volume is about the same. Overall, it’s better. If we have more profit, then we’re doing better.” Sales of Pine, Spruce, Cedar and Cypress in a wide variety of grades go to retail lumber yards. “They’re all going great,” the lumber provider said of his customers. Transportation is not a problem, he said, because, “We own our own fleet. We handle that inside.”
