As we continue to track our hardwood lumber market trends through the current COVID-19 situation, we are still seeing a relatively insignificant effect on pricing. At one point, we were unsure as to how the bottlenecks resulting from mandatory economic shutdowns were going to impact our markets, surprised (pleasantly) that very little negative consequences had taken place. We mentioned that there was an expectation that at some point, we would see some problems occur, but as yet nothing of substance has reared its ugly head. Though we aren’t out of the woods yet (pun intended), we continue to witness a consistently flat line of pricing which some industry economists say are at their low points.
There have been a number of articles written by analysts that remain cautiously optimistic about our hardwood markets going into the fall, and it seems that what had been predicted by some has happened – an extended lull in pricing that normally occurs during the summer months but would be in effect a little longer than usual due to COVID concerns. The cautious approaches that many mills have taken during this time in terms of inventory management have resulted in low supply in some cases, yet demand continues, and inventories need to be replenished.
As many of you have heard, the demand for (and price of) softwood lumber has skyrocketed during the pandemic, as do-it-yourselfers have and continue to flock to their lumber yards and big box stores to grab lumber for projects around the house. All-time price records have been set for softwood framing and other lumber products, and there has almost always been a secondary and positive effect that softwood lumber demand has on hardwood lumber.
As can be seen in the new graphs below, over the course of a year, with the exception of ash (due to deteriorating quality and subsequent demand), very little decline had occurred. Cherry also saw a drop off in price during the last quarter of 2019 (due to the China-US Tariff situation), and actually started to level off and begin to improve as the Phase One deal with China was signed, but that’s about the time that the COVID situation came to the forefront. Cherry has basically leveled out and has been flat ever since. A look at trends over this past month (August 14 thru Sept 11) show a continued slight decline in ash, with all species except hard maple staying consistent. The latest report shows that hard maple has taken a slight tick up, which has been predicted as we come into the fall season.
Though lower grade 4/4 Ash dropped slightly, better quality and thicker ash lumber ticked up slightly to reflect slightly improved demand during late August and early September. Cherry sales continued to be mixed, as many are saying demand is slow, but one PA mill commented that “it could still make a profit” on cherry lumber sales, and that there are “some pockets of good business” that can be found in the cherry markets, though China has put some pricing pressures on cherry at the moment. Hard maple pricing has begun to tick upwards, and one mill reported that it was “trying to pull in more logs (of both hard and soft maple) as both are moving.” Several yards have reported that demand has been rising for 4/4 #1 common hard maple (again, reflected somewhat in the upswing in pricing). Soft maple has leveled off for now, with the expectation that as usually happens, it will increase again when hard maple becomes more difficult to acquire. Though we’ve seen a very slight downtick with Red oak pricing very recently, some mills are beginning to report rising orders for that species, in some cases pushing fairly substantial price increases. Though comments about red oak demand remain mixed, a flooring manufacturer mentioned that its supply is getting “tight.” Reports are that Poplar is also beginning to see rising demand in green 4/4 #2 common, with comments that domestic demand remains “mixed”, but that international demand – especially from Vietnam – is beginning to increase.
(Major Source/Quotes from: Hardwood Review Weekly publications, Charlotte, NC)
The “unique” nature of our hardwoods (species variety/color/use/scarcity) has created significant global interest over the years which, even in economic downturns, has a buffering effect against value loss, and gives hardwood timberland owners some price protection. Because of that, the wild swings sometimes seen in the softwood lumber market are less frequent in hardwoods as domestic demand is often countered or sometimes enhanced by international demand. This is a benefit to hardwood forest landowners, and with the help of professional foresters, these benefits can be realized in a sustainable fashion for decades to come. Should you have an interest in managing/selling your timber, or have any basic questions, please call one of our foresters – you will be glad that you did!