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April 1st, 2016 #09201 Page #44
Don’t Forget! You Saw it in the
Adverti$er
Published by Layman's Lumber Guide Forecasting Suite
LAYMAN'S LUMBER MARKET BRIEFING Weekly Head Start Softwood Framing Lumber Market Forecast & Trading Strategies Matt Layman, Publisher Week #13
Sunday
March 27, 2016
Market Summary
Order File, Forecast & Strategy
This is an FDP reversal week asso well as a 3-week interval. This three week interval is the third consecutive one making this rally now nine weeks old. Historically, "extended" trends last nine weeks. This one has certainly given buyers ample time and opportunity to build spring inventories. Producer order files are over stated. We recall that to begin last week, most were claiming three weeks...some even boasting a four week back log. You will also recall how Layman's Guide readers were warned of the improbability that mills had sold 200% of production for three consecutive weeks to create that order file. Those over exaggerations will be evident by the end of this week after seeing more suddenly prompt wood and order files down one week or less. Truckload and rail car deliveries are not an issue. Flatbeds and drivers are readily available and should remain fluid through April. All told, our lumber market is losing upside momentum and reversing to a spring bear market with no delivery disruptions.
• Producer Order Files... The proclaimed producer 3-week order file has a negative market impact, especially with only 1.2 million housing starts. If indeed it is true, our lumber market is grossly over bought. Regardless, downside momentum will accelerate while buyers liquidate recent purchases. • Forecast... Spring is here on the calendar yet spring weather has been here since February. That implies much of spring's housing starts have already been started. The question now is, are there enough qualified home buyers to jack this housing market up another notch? Static mortgage applications and rates say no. • Strategy... Prepare for price weakness and downside acceleration through April. The surprise to the economy will be no housing follow through in May.
Forecasted Decision Points (FDP) 2015-17 Composite SPOT PRICE Composite 2x4's #2 SYP-E, SPF-W, Dry Hem Fir, Green Doug Fir. (Blue). 2015-Current FDP's (Vertical Red Lines), reversals or accelerations, since 01/99: 417 FDP's…360 turns within 1 week. 86% FDP Historical Accuracy.
400 380 360 340 320 300 280
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Forecasted Decision Points (FDP's) 2015-17 Oriented Strand Board (OSB) SPOT PRICE OSB. (Blue). 2015-Current FDP's (Vertical Red Lines), reversals or accelerations, since 01/99: 100 FDP's…87 turns within 1 week. 86% FDP Historical Accuracy
270 240 210 180 150
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Lumber Market Intelligence...Matt Layman, Publisher PO Box 905, Belmont, NC 28012 Phone or Text: 336-516-6684 Fax: 888-811-6917 Email: matt@laymansguide.org Reprint or distribution is unlawful without permission. www.laymansguide.org TWITTER.com/Laymansguide Join Matt Layman on LinkedIn Product dimensions referred to herein do not imply actual net sizes, rather are commonly used descriptions of the products.
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