SYP Tracker—April 2012 Mill2Market Results

Forest2Market’s composite lumber price increased by 9.1% throughout the month of April. The month began with a continuation of the price decline that began at the end of March; that week (Week 14), price dropped to $289/MBF. A rebound quickly began in Week 15, however, and price increased throughout the remainder of the month ending at $323/MBF, a $34/MBF increase.

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A historical look at April 2012 shows that prices are more closely following the trend line set in 2010, indicating that the lumber demand in the marketplace is improving. In both 2010 and 2012, prices have been influenced by mild winter weather conducive to construction. Unlike 2010, however, when prices were being driven by first-time homebuyer incentives, 2012’s increases can be attributed to lower new home prices, as they are now more aligned with what the market can bear. In addition, many developers are breaking ground on lots they have been sitting on since 2010 or earlier. As a result, demand in 2012 is more organic, a better sign for the market. Prices are still $64/MBF or 19.7% below the same time period in 2010.

Where do you think prices will go in the next month? Will they continue to push higher, or will the price drop we discussed in March begin to unfold? Let us know what you think.

Note: The figure above summarizes pricing data gathered for Forest2Market’s weekly lumber market report, Mill2Market. For this market report, Forest2Market aggregates sales order data submitted directly by report subscribers. This figure charts weekly sales order prices from January 2010 through year to date 2012 and compares sales order data, FOB Mill on a volume weighted $/MBF basis. The prices in the figure are composite prices; they include dimension lumber, timbers and boards.

About Mill2Market

For Mill2Market, Forest2Market collects 100 percent of all transactions—both sales orders and invoices—from 100 percent of all its subscribers. All prices are reported not as simple averages, but as volume weighted averages. For instance, if one order included 10 MBF at $260 and another included 100 MBF at $280, instead of reporting the average price at $270, Forest2Market would report the volume weighted price, which is calculated as follows:

(($280 ×100 MBF)+ ($260 ×10 MBF))/110 MBF  =$278/MBF

Using this method, Mill2Market provides an analysis of the southern yellow pine market in two ways:

•  A weekly market report that provides a real time description of how the market is operating in the current week. This report uses sales order information in order to capture the current market.
•  A quarterly market report that provides a comparison of an individual subscriber’s performance against the market. This report reflects invoice data in order to accurately capture final price.

For more information, visit the Mill2Market page of our website, or call Bob Bratton at 980-233-4034.