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Week of December 13, 2021

Here is what is happening in commodities this week.

Lumber……Mill files and pricing vary from mill to mill but let’s call order files late Jan. Pricing remains in an upward trend with all dimensions showing price appreciation.

Random print was up 50/m on 2×4 on the Mid week report and up another 50/m on Thursdays print making a gain of 100/m for the week.

Trucking has become a major problem with many loads running 2-3 weeks behind. It appears with prices rising rapidly many yards are buying less more often which does help feed the panic when we see these large market swings.

Large swings and rapid escalation in prices are the world we live in going forward so timing of purchases will be a big factor in your business in the coming years. At the end of the day if you are a lumber buyer your job is far more complex than it was a few years ago.

Old Man winter has arrived on the prairies and Christmas is just around the corner so perhaps those two factors will slow demand for a couple weeks and give mills a chance to catch up on shipments. 2021 has been a crazy year in the lumber business so why not end it with a wild finish.

Plywood…….Mills are OTM and order files are early to Mid Feb. Prices were up 12% at the start of the week with reports of some sales at 15% over print. Mills are controlling their order files by going OTM but yards are starved for plywood so when mills show the market some wood It gets snapped up and price doesn’t really seem to matter.

Watch for plywood to be up significantly again next week when mills come back on, it could be up as much as 10-12%. Interesting to note that 3/8 plywood is more cost effective than 3/8 OSB which is putting pressure on the plywood market.

Looking back at some levels, plywood at one time would trade between 380/m to 500/m on 3/8 basis FOB Toronto. Now it can trade from 500/m to 1500/m 3/8 basis FOB Toronto so you can see the stakes and risks are much higher than they once were.

OSB…..Similar story to plywood, mills are OTM and order files are late January. Market is starved for OSB and secondary’s are able to achieve premiums if they have wood to sell.

Watch for OSB to continue to trend up as shipping issues plague OSB producers.

Logistic issues, production cut backs , log and labor shortages and a strong housing market have all combined to put us where we are today. Until some of the problems are resolved  we are in for these wild swings.

US Feds announced yesterday they expect 3 interest rate hikes in 2022 perhaps that will cool a hot US housing market.

Time will tell but in the meantime happy selling and stay warm.