Friends and Neighbors,
In the later parts of May and into early June, lumber prices reached record highs. With history as our teacher, we know that what goes up, will always come down. Douglas Fir 2×4 is now trading right at what we would normally expect in the commodity markets. In a usual year, this would indicate that the supply and demand have met their equilibrium.
This year is anything but normal, so let’s take a deeper look at the undercurrents of the markets.
This spring, demand was peaking at the same time that logistics constraints plagued the industry. Dealers committed to inventory far into the future, not knowing what would be available or when. In some cases, Lumber Traders committed to inventory that would not sell for several months, believing that we would not have anything to sell, if we did not. Our yards are flush with inventory as a result. (Most dealers around the country followed this same pattern).
Suppliers banked on a strong building season and kept producing to the point where now they now have inventory back logs. Their yards are now flush with inventory as a result. (Mills also followed this same pattern).
High prices drove many projects to stall or delay due to bank contingencies or financing issues. With the market correction, things have definitely picked up on the retail front. The bad news for us is that we have expensive inventory that is selling at deeply discounted rates because the entire channel is in a state of oversupply. This is good news for consumers as prices are moderated or declining in many cases. In the next month or so, the market will correct from the slide as dealers enter the replacement market to fill holes in inventory.
What does all of this mean? Now is as good a time as we have had in the last twelve months to buy into the market or start your project. Prices are reasonable for lumber with panel pricing touching winter time retails. The weather is good, pricing is right, inventory is plentiful, and our stores are ready to help!
Should the markets change or other factors come into play, we will keep you posted on our social media and our blog.
If you ever want an opinion on where things are heading or why, please reach out to me via email or at the stores by calling 360.452.8933. You can also follow this blog and our social media platforms to stay current on what is happening in the world of building materials.