RFGuy
Yeah, I saw something else online that indicated the top 5 lumber producers in the USA are Georgia Pacific, Interfor, Sierra Pacific, West Fraser and Weyerhauser. So, G-P and S-P are private companies, but the rest are publicly traded companies so financials are available. So, Weyerhaeuser just reported $1.1B in profit for Q1 2021, versus $413M in Q1 2020. West Fraser reported $665M in profit for Q1 2021 compared to only $9M in Q1 2020. Interfor had record profit of $392M in Q1 2021 compared to $36.6M in Q1 2020. Wondering if price fixing is a possibility here. I mean from what I understand the landowners aren't making out right now, e.g. logs sold continue to be at the lowest price in a couple of decades. So, the owners of the trees aren't seeing any more money from this. I don't believe small sawmills and truck drivers are making that much more, other than maybe some overtime pay. It's possible that the big box stores (Home Depot, Lowes, Menards, etc.) are profiting from this, but I find it hard to believe they could get away with this due to competition between them. So, that really just leaves the large sawmills/warehousers like the top 5 listed above. Don't get me wrong, I know there is increased demand, but I don't believe the supply<->demand dynamic at present indicates a 4x run up in lumber futures prices. I do believe the vast majority of this increase in lumber prices is going directly to benefit these top 5 lumber producers. The year-on-year quarterly profit for Interfor went up like 10x, but West Fraser's went up 74x. Weyerhauser only went up like 2.5x. We'd have to get into any special one-time expenses for these companies to validate if their last year's profit was reduced for some reason. In addition, we would have to look at how much volume of product they shipped this year versus last year, but....does anyone think actual lumber demand in the USA is so high to justify a 10x or more increase in profit for these lumber companies???
Hobbyman2
I am sure there are many of us who remember when 400k would buy a country block and a new mansion with a cement pond . now ya only get a economically engineered house on a single lot . I believe economics is working against most people now. on the flip side real-estate is a good profession to be in right now .
davebodner
I saw an article somewhere laying out various complicated reasons for the sudden spike in prices. Sawmill capacity seems to be the controlling factor. There was a reduction in sawmills due to previous declines in demand. Now that demand has increased sawmills aren't being re-opened quickly.
1. New sawmills are complicated; it's not just a matter of dragging a power saw out into the woods. How long will increased prices last? Will prices collapse just in time for my new sawmill to go on-line?
2. Northern sawmills aren't as economically viable anymore. They traditionally sold their wood chips to the paper industry (newsprint and office paper), but there's been a permanent drop in paper demand. Southern sawmill chips get turned into toilet paper. I'm buying as much of that as ever. Until the northern sawmills find an economical use for their waste, they'll stay closed.
RFGuy
davebodner wrote
I saw an article somewhere laying out various complicated reasons for the sudden spike in prices. Sawmill capacity seems to be the controlling factor. There was a reduction in sawmills due to previous declines in demand. Now that demand has increased sawmills aren't being re-opened quickly.
1. New sawmills are complicated; it's not just a matter of dragging a power saw out into the woods. How long will increased prices last? Will prices collapse just in time for my new sawmill to go on-line?
2. Northern sawmills aren't as economically viable anymore. They traditionally sold their wood chips to the paper industry (newsprint and office paper), but there's been a permanent drop in paper demand. Southern sawmill chips get turned into toilet paper. I'm buying as much of that as ever. Until the northern sawmills find an economical use for their waste, they'll stay closed.
Thanks Dave. Those are some good insights, particularly the part about a drop in the market for wood chips due to a drop in demand for paper. Like I said, I have seen a few articles and YouTube vids on it, but no one really addressed the
why of it. A lot of it is wild speculation and conjecture with no real analysis or data to back it up. It is unfortunate that the sky high price of lumber futures isn't trickling down the supply chain to benefit Mom and Pops farms trying to sell off trees, but from the limited data I have seen this doesn't appear to be the case. Hopefully when the new president is done with the perceived semiconductor shortage and fixing east coast gas shortages, maybe he can sign an executive order to attempt to address my perceived lack of competition amongst the large sawmills & lumber producers. Don't get me wrong, I am all for companies taking profits, but it is starting to look like price gouging to me. As one who grew up in hurricane territory, I have seen local price gouging 1st hand after every major storm unfortunately and this seems eerily familiar to me.
jsburger
Here is an article on the subject from the local NBC affiliate in Salt Lake City KSL-TV that some of you might be interested in.
https://www.ksl.com/article/50164480/lumber-prices-have-quadrupled-heres-who-its-hurting
There are 3 or 4 subdivisions close to me that were in early stages of construction. Leveling land, delivery of sewer and storm drain pipe, etc.. There has been no activity on any of them for a couple of months.
Hobbyman2
good post, I found this article on the furniture aspect of the trades .
These developments created an explosion in the furniture industry. One that jumped on the demand button and has been holding it down ever since. This is fantastic news for furniture companies, right? Yes. Fantastic for furniture companies that build the really good stuff out of solid wood right? Well, yes, but as the pandemic caused shutdowns, hold ups and challenges, the effects were felt in the furniture supply chain, resulting in one great big lumber shortage.
https://www.dutchcrafters.com/blog/the-american-lumber-shortage-what-you-need-to-know-for-solid-wood-furniture/
RFGuy
For anyone interested, I came across this interview with Bob Bauer, Executive Director of the Kentucky Forest Industries Association regarding the price of lumber. One interesting comment made was that certain sawmills are having a hard time getting employees to come back to work. Due to the federal stimulus package, unemployment has become too lucrative and is actually preventing workers going back to the sawmill to work again. Don't know how widespread this issue is, but I found it interesting as a possible explanation for supply side factors affecting the lumber shortage and subsequent price increases.
https://www.yahoo.com/news/why-lumber-prices-keep-soaring-184237553.html
RFGuy
Single Family Housing starts crashed last month (9.5% drop when 2% was expected), so it looks like sky high lumber prices are having an effect. Just have to wait for supply & demand to balance out to a more reasonable level. Fingers crossed that this will continue and lumber prices will correct a bit...
https://www.zerohedge.com/personal-finance/single-family-housing-starts-crash-april
Ed in Tampa
RFGuy wrote
For anyone interested, I came across this interview with Bob Bauer, Executive Director of the Kentucky Forest Industries Association regarding the price of lumber. One interesting comment made was that certain sawmills are having a hard time getting employees to come back to work. Due to the federal stimulus package, unemployment has become too lucrative and is actually preventing workers going back to the sawmill to work again. Don't know how widespread this issue is, but I found it interesting as a possible explanation for supply side factors affecting the lumber shortage and subsequent price increases.
https://www.yahoo.com/news/why-lumber-prices-keep-soaring-184237553.html
I know my son in law would kill to get help in his lawn care business, seems no one wants to work for $11 an hour to start. Also a chic-fil-a had to close early 6 pm because they could not get workers. Taco Bell is in the same position. My favorite restaurant has a sign for bus boys, servers, cooks and kitchen help. Owner is now doing the cooking before he was out front welcoming people and cashing them out.
Every place I go the owners are crying because they can not get workers. It seems people took off for Covid and found out they liked that life style. Farmers here in Florida are seeing produce rot in the fields not worker.
Personally I think our economy is circling the drain hole and our leadership can't or won't do anything about it because of politics.
Hobbyman2
covid seems to be a convenient source for free money that's for sure . especially since 99.9 percent of the people who had it are still alive and well with out the vaccine . it is definitely convenient . I personally know 4 people who were diagnosed and were told to go home stay there and take vitamin d and vitamin k and shake it off .
jsburger
Hobbyman2 wrote
covid seems to be a convenient source for free money that's for sure . especially since 99.9 percent of the people who had it are still alive and well with out the vaccine . it is definitely convenient . I personally know 4 people who were diagnosed and were told to go home stay there and take vitamin d and vitamin k and shake it off .
So what do you say to the 600,000+ other people that have died from Covid?
Hobbyman2
Thanks John
first things first, as all ways we are sorry to hear of any one's loss and send our prayers ,more people die from overdoses of heroine and meth , heart attacks, cancer and abortions . not every one will agree and it is their privilege to believe what they want ,I am good with that , if ya feel safe in a mask than please wear one , most of the time a persons 3rd sense is correct, same with the vaccine , if you believe than get one , I sure wouldn't call some one out for getting it I am no DR but I have had several friends and relatives who were told they had covid , some had multiple test , some came back positive and were retested a day later came back negative, every one who went to the DR office with covid was sent home or told not to come in at all , , not one , but every one , not one was prescribed any medication just ,vitamin D and vitamin K , only one lady I know who was said to have it was hospitalized, she had immune issues and blood poisoning in her legs when she {contracted it } hard to imagine becaus eshe was bed rest at her home ? to my knowledge her meds were very limited for the covid , one fella was on dialysis prior and still sent home , they all feared for their lives after all the hype from the government and media , they were all told to go shake it off , not one but every one , they were also told that any one who died from Pneumonia or the flue was considered to be a covid case , and and all respiratory issues were to be called listed as covid , not one but every one , national research numbers has proven the flue and pneumonia cases were reported as nearly non existent this year , it was all covid ??? One fella owns a brick yard , he was so scared he was going to die if he caught it that he locked his doors and ya had to have a appointment to get brick / block , even than no one was allowed in the building, well he caught it ,I talked to him the other day and he said the mask was a joke and he refuses to wear one now, and he will not get the vaccine or require any one to wear a mask in his establishment , his office is wide open and he said the non believers can ,, well I wont go there , he said it was no worse than any cold other than he lost his taste for 3 days . I could elaborate stories of this for a long time, not only that but about opinions of those who passed and the legitimacy of the coroners reports , it was said once that a coroner can write anything on a death certificate because no one will ever check or question their report . Do I believe ? yes , I believe in chemical warfare , thin the population and blame it on a disease ?? it is possible but not proven ? I have not worn a mask unless I had to go into a big box store and that is very seldom . in the fall of 2018 I had something that strongly resembles these symptoms and I am still here, at that time covid had not hit the radar , one thing I will say of those who had it , even after wearing a mask ,mask did not work , South Dakota and Fl have both proven mask are not quite what they were supposed to be . and if these states are fine with out a vaccine as well than maybe there is something to that . this is just my opinion from the facts and situations presented around me . I do know I am sick of seeing these mask laying around .
davebodner
Resurrecting a slightly old thread.
It appears that lumber prices have come down 40% since last month's peak when we were all complaining. They're still kind of high, and they may stay that way. But, let's hope not.
Hobbyman2
A friend of ours is building a new home, he just bought the truss's and plywood last week, cost was 22k , no joist or studs . home is appx 1000 sq ft .
dusty
Hobbyman2 wrote
A friend of ours is building a new home, he just bought the truss's and plywood last week, cost was 22k , no joist or studs . home is appx 1000 sq ft .
Translation, Please.
How much would you have expected the truss's to have cost before these "unexpected increases"?
BTW - Have you been to a lumber yard lately? Is there an obvious lack of materials? Certainly NOT where I have looked. Houses are being built as fast as the construction crews can make it happen.
RFGuy
Fortunately supply and demand appear to be working well in the lumber futures market as prices are now crashing. Below is the 6 month chart for lumber futures showing things seem to be getting back to "normal". Assuming it will still take a couple of months for the price at the big box stores to track this drop, but I am no expert. I haven't shopped lately so I have no first hand experience. Has anyone seen prices start to drop yet in the retail market?
[youtube]https://www.youtube.com/watch?v=XUt5DCeA60w?t=1[/youtube]
Hobbyman2
dusty wrote
Hobbyman2 wrote
A friend of ours is building a new home, he just bought the truss's and plywood last week, cost was 22k , no joist or studs . home is appx 1000 sq ft .
Translation, Please.
How much would you have expected the truss's to have cost before these "unexpected increases"?
BTW - Have you been to a lumber yard lately? Is there an obvious lack of materials? Certainly NOT where I have looked. Houses are being built as fast as the construction crews can make it happen.
--------------------
Thanks Dusty .
I have not bought trusses in many years , and when I did it depended on you truss and how it was built as to the cost , my garage trusses are 28ft and two story , If I recall they were under 50.00 each delivered , but that was years ago .
I have been to what is called a lumber yrd but IMO it is not close to what a true lumber yard was .
Lowes had 2x4x8 ft , 9.89 ea ????? 2x6x8 were over 15.00ea , as to the construction here , it is practically non existent .
Hobbyman2
RFGuy wrote
Fortunately supply and demand appear to be working well in the lumber futures market as prices are now crashing. Below is the 6 month chart for lumber futures showing things seem to be getting back to "normal". Assuming it will still take a couple of months for the price at the big box stores to track this drop, but I am no expert. I haven't shopped lately so I have no first hand experience. Has anyone seen prices start to drop yet in the retail market?
LumberFutures.jpg
https://www.youtube.com/watch?v=XUt5DCeA60w?t=1
---------------
Was at big box tonight , no price change yet and the yard was vacant .
bainin
I've been waiting on buying some OSB to finish expanding the attic floor space for months.
Prices still hovering around $50-60 for a 4x8 ...
b
Hobbyman2
