The composite southern yellow pine lumber price continued its upward surge through most of March (there are still two weeks of prices to report). The price increase is reflective of the larger market optimism, as well as the generally mild winter weather many regions have experienced this year. 1Q is also the traditional period for inventory building, which applies pressure to supply and drives prices higher.
The US housing market has performed solidly through 1Q2017. Housing starts rose to a seasonally adjusted annual rate (SAAR) of roughly 1.3 million through February, which is up nearly 8 percent from 1.2 million in 2016. With supply below historical norms, housing demand will increasingly rely on the construction of new homes. Recent commentary by Morningstar noted that, “Given that new residential construction and remodeling make up roughly half of lumber demand, we expect lumber demand to rise substantially through 2021.”
Week 12’s price was at the $411/mbf mark, which was down sharply from week 11’s $432/mbf. Week 12’s price is 6 percent above its January 2017 starting point of $387/mbf, and 18 percent above its 2016 week 12 price of $348/mbf.
A closer look at prices since the beginning of the year: