After taking a break from reporting last week due to a Forest Landowners Association meeting, we are happy to pick up where we last left off. Now that some economic numbers are in and tallied, general indications are that the hardwood industry is in “good shape”, showing both domestic and export demand robust and continuing to be so. Strong demand and moderately low inventories (mostly due to weather conditions) have created a steady and strong transactional situation in general across the industry. Log prices are seeing the effects of this consistent demand for lumber and have increased in response.
On a national scale or our Gross Domestic Product (GDP) has been accelerating a bit; not yet at levels most were hoping for – though optimism remains. Total housing starts are seeing a tick upward, with an increase of about 2% over last year at this time. Single-family housing starts are up over 10% as compared to last year at this time, showing a seasonally-adjusted rate of about 849,000 starts. Fannie Mae is predicting that single family housing starts will maintain an annualized rate of about 850,000 by year-end, but will grow to about 980,000 by the end of next year (2018). Housing prices are said to have increased an average of about 6% since last year, which is one of the factors tempering the entry of first-time buyers into the market. General consensus is that demand will continue to exceed supply for awhile, pressuring prices to continue upward (Weekly Hardwood Review).
Tony Burbeck, Editor of the Weekly Hardwood Market Review (www.hardwoodreview.com) sums up the general overall conditions of the hardwood market this way: “most hardwood industry contacts remain upbeat, and for good reason. Housing markets continue to improve with starts steadily climbing back to pre-recession levels, while exports should continue to pace ahead of last year and will likely set yet another record. Less global political uncertainty and more domestic economic agenda accomplishments would make the hardwood industry even stronger.”
On the more “local” front, in the Appalachian Region, ash continues to move well, and we noticed another bump up in 4/4 prices for this species this past week. Cherry continues to sell well, with some increase in prices indicated for higher quality material. Hard maple continues to move well, seesawing again above soft maple in certain market areas within the region. Red oak also continues to move steadily, with some pricing fluctuation depending on the thickness and grade of the lumber (ibid).
General lumber market comments/trends in the Appalachian Hardwoods region:
- Black cherry: + 19.7% (since Jan 6th 2017)
- Hard (sugar) maple: 4% (since Jan 6th 2017)
- Red oak; -1.24% (since Jan 6th 2017)
- White ash; +16.5% (since Jan 6th 2017)
- Soft maple; 0% (since Jan 6th 2017)
Perspective and % Changes are measured using data from January 6, 2017 to August 18, 2017