After popping up by a sizeable degree in the first full work week of 2021, last week benchmark softwood lumber and panel prices corrected downward to more sustainable levels as demand continued strong but supply was able to serve a burst of orders. This year, sawmills across Canada and the U.S. are well poised to produce ample lumber volumes for white-hot construction activity across the continent.
Indeed, Canadian and U.S. housing starts and home sales data for full-year 2020 showed extremely robust real estate markets, which are not going to slow down through this year, and possibly through 2022. One important metric to note is that the largest demographic entering the first-time home buyer cohort is millennials. This suggests sustained, longer-term high demand for home sales. Strong home sales inevitably leads to high rates of home construction, which of course means building materials — specifically lumber — will continue to sell well for quite some time to come.
The view going forward is that ongoing demand for real building projects will keep lumber prices high. Whether they will surpass the record-levels of last year remains to be seen. U.S. Western S-P-F sawmills navigated another sneaky strong week as winter deepened further. Prices were adjusted down by most producers in an effort to find trading levels appealing to buyers, and a steady undercurrent of business kept decent volumes of WSPF commodities moving.
After another quiet start last week, Canadian Western S-P-F sales activity picked up around Thursday as buyers’ scant inventories generated a spate of purchasing. As January 2021 marched on, lumber prices corrected downward somewhat from the unseasonal increase for the first week of the year. In the week ending Jan. 22, 2021, the price of benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr dropped by -$50, or -5.6%, to U.S. $894 mfbm, from $944 the previous week. Last week’s price is +$20, or +2.3%, more than it was one month ago when it was $874. Compared to the price one-year-ago, of U.S. $402 mfbm, last week benchmark softwood lumber item Western S-P-F KD 2×4 #2&Btr was selling for U.S. $894 mfbm which is +$492, or +45% more.
The below table is a comparison of recent highs, in Sept. 2020, and current Jan. 2021 benchmark dimension softwood lumber 2×4 prices, compared to historical highs of June 2018 and compared to recent lows of Sept. 2015: