As mentioned last time, we’ve been seeing definite improvement in our hardwood markets as both domestic and international demand continues and producers are still running on tight supply margins to fulfill their customer orders. On the domestic front, the spill-over demand for softwood lumber from the Do-It-Yourself (DIY) crowd during the COVID pandemic has crept into hardwood territory, as finishing lumber has been in demand, and as furniture orders have increased as people are replacing home furnishings they’ve gotten tired of seeing while staying home. Also, “home offices” have increased in popularity and they need to be furnished as well. China and Vietnam, among other countries, also continue to order both hardwood logs and lumber and with the recent news that planned tariffs on our lumber exports to China have been delayed at least until September, their demand is projected to remain steady throughout the spring and summer.
Regarding hardwood lumber prices, every species, grade, and thickness has shown an increase in price – with most increases in the double digits since January 1 of this year. White ash (#1 Common 4/4) has increased the most significantly from $410/MBF to $550/MBF, or a 34% increase. Black cherry (#1 Common 4/4) has increased from $635/MBF to $760/MBF (20% increase), hard maple went from $975/MBF to $1,175/MBF (20%), soft maple rose from $850/MBF to $900/MBF (6%), red oak climbed from $730/MBF to $835/MBF (14%), and white oak increased from $975/MBF to $1,085/MBF (11%).
Except for railroad ties and frame stock, pallet lumber, cants, and flooring have all increased as well since January 1st, with the biggest increases found in the white oak flooring (#1 Common 2-1/4”) category (19% gain).
These lumber markets are beginning to push stumpage markets higher; over the last few weeks, good quality timber has been selling extremely well through the bid sale process, with excellent participation and prices being paid.
Key Market Comments – General Observations
There is no doubt that our hardwood markets are heating up, and there remains continued optimism coming from a number of reporting sources for these trends to continue for a while. A recent issue of the Hardwood Weekly Review (March 12, 2021) states that, despite several reports of some buyer resistance because of such a quick price run-up, “prices, in general, jumped in mid-February and have continued to climb since.” Prevailing price runups are continuing, “and more aggressively for many items than at any other time since the market started strengthening in October.”
Other statements confirm this improving direction. Mills are reporting that “demand continues to rise for everything,” and a kiln drying mill was quoted as saying “business is pretty good, and prices keep going up with relatively little push back.” This quick rise in lumber pricing is also creating some push-back; European buyers are starting to resist the continued price climb for white oak, and China is beginning to balk at the quick rise in cherry lumber pricing. There has also been a surge in demand for flooring, with several flooring plants “struggling to raise strip flooring fast enough to keep up with rising lumber prices.”
Despite some resistance that is starting to emerge due to a red-hot market pricing environment, both domestic and international demand continues for a variety of hardwood species and products. The widening gap between hard and soft maple is slowing, and the $275/MBF spread between the two species is predicted to begin closing within the near term. Red oak lumber prices are reportedly the highest they have been in more than two years, and as of this writing is continuing to climb.
We are starting to see this demand for hardwood lumber and low-grade material to transfer over to stumpage prices as well. Recent sale results have been excellent, with terrific bid participation and prices being paid. Though good quality timber still commands the most attention, lower quality sales are also selling as well. As always, we will continue to keep our focus on these markets and keep you up-to-speed on what we see!
The following charts illustrate the trends in price changes by species over various time periods:
As demand from our hardwood mills continues to ramp up, though we still see occasional challenges with low quality timber sales, bid sale activity is increasing and the sales of high-quality timber are bringing good results. If you are interested in selling your timber, or just have questions about the process or even where to start, don’t hesitate to give our foresters a call!