Q. What is going on with wood prices? Do you have a forecast?
Answer. Great question indeed. I have just polished my crystal ball and here is what I see. Softwood construction lumber prices are 183 percent higher now than about two years ago. They seem to be rising further with the strong new housing numbers of 1.4 million new starts annually. In addition to high demand, the supply of lumber is very tight. In the past twenty years, Canada has been providing about one-third of our construction lumber, but this has dwindled due to forest fires and other environmental concerns, plus the U.S.-Canada tariff.
Hardwoods, and softwoods used in furniture like eastern white pine, seem to lag, but follow the softwood trends. Hardwoods have some serious supply issues as there is a shortage of loggers and logging truck drivers (salary is low and outdoor working conditions can be brutal).
Plus, we have had a lot of sawmills go out of business during the recession, partly because they bought logs for the future expecting high lumber prices but lumber prices dropped. All this has resulted in less lumber than we need. What has helped keep the prices down is the Chinese market (perhaps 12 percent of U.S. hardwoods, mostly upper grades, went to China) dropped to almost zero.
But, when trade resumes with China and other parts of the world, the increased demand will drive up prices to record highs. Plus, we can expect that the railroads will need more wooden ties, which means less lumber and more ties.
Some wood manufacturing companies have already “seen which way the wind is blowing” and have purchased large acreages of forest land to assure that they will have future timber supplies at a very reasonable cost. With the cost of wood in many wood furniture, cabinets and flooring being 75 percent of the total, controlling wood prices is smart.
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