Hardwood lumber sellers will face some headwinds this summer from sluggish new home starts and existing home sales, reduced remodeling market growth, and slower exports.
Year-on-year growth in sales of kitchen cabinets, residential flooring and other wood products for the home will slow in the months ahead. U.S. GDP contracted in Q1 2014—mostly due to the severe winter—but most leading indicators point to solid economic growth in Q3 2014 despite housing’s flatness. As such, pallet cants, railroad ties and most other industrial products will still see very strong demand.
For the first time in at least 18 months, grade lumber buyers won’t be looking at across-the-board price hikes this summer. With production increasing, 4/4 Red Oak and Hard Maple are now abundant, and more items will reach that point in July/August. A few species like Walnut and Cherry will continue to firm, but most will be fairly level in price, and buyers of Red Oak and Hard Maple will see some price relief.
Importantly, underlying demand for hardwood lumber is still good. So while markets won’t be as fiery in the next 60 days as they’ve been in the last year, the embers are still burning, and they’ll be fanned back into a flame by renewed export growth in the late summer and early fall.