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Lumber Collusion?

HB2Havasu

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So driving out to the river last Friday going out via the 10 Freeway I notice a HUGE stockpile of lumber at the Rialto Train Depot. There had to be at least a few hundred thousand board feet. It's not the first time I've noticed it, and it is seeming to grow larger every time I go by. We're being told there is a lumber shortage but when you see shit like this you have to think Collusion is happening?
 

Nordie

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Something seems strange, when finished maple and birch 3/4 ply is still the same price something doesn't seem right.
 

NicPaus

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There is no shortage. Just demand. With housing prices they can't build them fast enough. Why lower the price if they are paying.
 

EmpirE231

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yep, seen the same thing off the 215 by march airforce base for a while now...trains sitting there with a ton of Lumber. Also all the lumber yards are stocked taller than I've ever seen.
 

scottchbrite

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So driving out to the river last Friday going out via the 10 Freeway I notice a HUGE stockpile of lumber at the Rialto Train Depot. There had to be at least a few hundred thousand board feet. It's not the first time I've noticed it, and it is seeming to grow larger every time I go by. We're being told there is a lumber shortage but when you see shit like this you have to think Collusion is happening?
It’s probably for Peterman lumber which is right there along the 10

yep, seen the same thing off the 215 by march airforce base for a while now...trains sitting there with a ton of Lumber. Also all the lumber yards are stocked taller than I've ever seen.
I believe it’s for the truss companies located there - inland and cal truss are there in Perris


These prices are dumb. I just want to finish the inside of my shop!
 

J DUNN

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We do commercial cabinets and have not seen much price increase if any. We don't buy much plywood but what we do has not gone up significantly. I agree with @NicPaus that it is a demand issue but also supply. We've been told by our distributers that there is a lot of containers with MDF (comes from New Zealand) and plywood that cannot get into port fast enough. Thankfully all of our Melamine and Particle Board is from Pacific Northwest. There is a bit of shortage there but in December I bought 30 units which has easily carried us through. My rep from Ganahl called last week and told me there is a shortage on Blum hardware and hinges but not to worry, he set some aside for me incase my main distributer runs out. I said, "Really, how many do you have?" He put away about 1500 hinges for his customers. I told him that in December I bought a year supply so if HE runs out of his 1500 he can call me and come get a portion of my 20k hinges we have stocked.

Supply and Demand.
 

Ace in the Hole

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We do commercial cabinets and have not seen much price increase if any. We don't buy much plywood but what we do has not gone up significantly. I agree with @NicPaus that it is a demand issue but also supply. We've been told by our distributers that there is a lot of containers with MDF (comes from New Zealand) and plywood that cannot get into port fast enough. Thankfully all of our Melamine and Particle Board is from Pacific Northwest. There is a bit of shortage there but in December I bought 30 units which has easily carried us through. My rep from Ganahl called last week and told me there is a shortage on Blum hardware and hinges but not to worry, he set some aside for me incase my main distributer runs out. I said, "Really, how many do you have?" He put away about 1500 hinges for his customers. I told him that in December I bought a year supply so if HE runs out of his 1500 he can call me and come get a portion of my 20k hinges we have stocked.

Supply and Demand.
We just got our cabinets in Havasu that were ordered 6+ months ago. From what we were told no more plywood boxes for now...its particle board etc. Who knows how true that is...but I wanted the finished ply on all of them.

Things have gotten stupid. We just got an order of windows that I bought last November for a client in TX.
 

HotRod82

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I was just reading this morning lumber demand is crashing at the retail end. July futures already down significantly. The article states the mills were in an "inventory depletion" cycle to bring prices up when Covid hit. The mills were then forced shut which depleted the inventory further than anticipated. The supply sleuth is now full again, so the prices are coming down. IMO, the new housing starts data spells bad news for the mills later this year.
According to my local fire marshall, high level meetings in Sacramento are discussing opening huge swaths of forest in CA to the loggers for fire mitigation. The dead wood situation is untenable and logging is the states only way out and they know it. If this happens, there will be a glut of timber and look for 2 dollar studs again....
 

Mandelon

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Lumber Prices Break New Records, Adding Heat to Home Prices
Sawmill owners poised to reap big profits, while home buyers, renters bear brunt of rising wood costs

Demand for lumber has skyrocketed during the pandemic, sending prices to all-time highs. This video explains what’s driving the lumber boom, who’s profiting, and why those growing the trees aren’t reaping the benefits. Illustration: Liz Ornitz/WSJ
By Ryan Dezember
Updated May 3, 2021 4:49 pm ET

The frenzied climb in lumber prices is generating superlative profits for sawmill owners. Home buyers, renters and do-it-yourselfers are footing the bill.

Wood prices pushed further into record territory, a sign that Weyerhaeuser Co. WY -2.36% , Canfor Corp. CFPZF -5.42% and other sawmill owners are in line for even fatter profits than the record earnings they have been reporting for the first three months of 2021.

These companies have emerged as the biggest beneficiaries of the wood boom. They are feasting on a glut of cheap pine trees in the U.S. South while their finished products like lumber and plywood are flying off hardware-store shelves and being bid up by home builders.

Lumber futures delivery later this month ended Monday at $1,575.60 per thousand board feet, a record and more than four times the typical price this time of year. Futures rose by the daily maximum allowed by the Chicago Mercantile Exchange during nine of April’s 21 trading sessions.

Exchange rules remove daily trading thresholds during the month in which a futures contract expires, which means May futures have no limit to how high they may rise before the 15th, when the bets are settled. On Monday, May futures shot up $75.60, the most ever in a single day.

On-the-spot prices for two-by-fours and other wood products also have jumped to fresh highs, according to pricing service Random Lengths. Traders worried about being left empty-handed capitulated, and the firm’s framing-lumber-composite price made its highest ever weekly gain, ending April at a record of $1,290.

“Nervousness on the part of many traders was palpable, as they considered what the downside of the run might look like,” Random Lengths said in its weekly report.

Mill owners say they are backed up with orders into June. Boards for July delivery, the most actively traded futures contract, ended Monday at $1,418.50. September lumber cost $1,277.

“Absent a significant increase in mortgage rates or a Covid resurgence, it is hard to imagine what could cause lumber demand to drop and prices to moderate in the foreseeable future,” said Eric Cremers, chief executive of PotlatchDeltic Corp. PCH -3.94% , which owns timberland and mills in Idaho, Arkansas, Michigan and Minnesota.

The Spokane, Wash., company’s wood-products division earned $125.5 million during the first quarter, its best ever. Lumber futures have risen by about two-thirds from the $890 average price that Potlatch fetched during the first quarter.

“Builders are reporting record home sales, and they’re going to need that wood to build those homes,” Mr. Cremers told investors and analysts last week.

To emphasize how tight supplies have gotten for many wood products, the CEO told them about his own fence, which blew over in a storm, and the landscaper who had to drive 100 miles out of town to find cedar posts to fix it.

When the economy was shut down last year to slow the spread of the coronavirus, sawmills sent workers home and curtailed production. By April, roughly 40% of North America’s sawmill capacity was shut down.

U.S. wood product output returned to pre-pandemic levels in December, according to the Federal Reserve. Yet production remains about 16% lower than the 2006 peak, which is the last time so many houses were being built.

The Fed last week recommitted to near-zero interest rates, which have fueled the red-hot housing market. Rising home prices and low rates have also helped existing homeowners refinance mortgages to pocket cash without adding much to payments. Mortgage-finance firm Freddie Mac estimates that Americans last year withdrew nearly $153 billion from their homes in cash-out refinancings. Vacation options were limited by the pandemic and a remodeling boom ensued.

Demand hasn’t been diminished by soaring prices, mill executives say.

“The prices appear to be passing on,” Canfor CEO Don Kayne told investors Friday. Canfor, which owns mills in northwest Canada and throughout the U.S. South, notched quarterly records in sales and profit. “So far we haven’t seen the resistance that you would expect.”

Builders including PulteGroup Inc. and the Howard Hughes Corp. say they have offset higher prices for lumber as well as for other building materials by raising home prices without slowing sales. NexPoint Residential Trust Inc. investment chief Matthew McGraner assured shareholders that high lumber prices weren’t eating into the apartment owner’s margins. “Any additional costs, we’ve been able to pass on to the tenants,” he said.

At a recent investor conference, Lowe’s Cos. finance chief David Denton said the home-improvement chain and its rivals weren’t waiting to see if the run-up in lumber prices would be short-lived before raising prices.

“That largely gets passed on pretty much real-time into the marketplace and you’re seeing that across the industry,” he said.

--Wall Street Journal Article
 
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