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Component Manufacturing dverti$er
Don’t Forget! You Saw it in the
April 2019 #11237 Page #78
Adverti$er
Lumber Briefs By Matt Layman Publisher, Layman’s Lumber Guide
The Repeating Lumber Market Cycle
Layman's Lumber Market FORECAST Component Manufacturer's Edition It's easy when you know what's coming. Matt Layman, Publisher
I
t is my belief that the lumber market trades in a repeating, predictable pattern. That April 2018 pattern is created by the interaction between production and how the supply chain lumber dealers, component manufacturers, wood preservers, and wholesale distributors The Repeating Lumber Cycle collectively prepare for seasonal increases in lumberMarket demand from new home builders and remodeling contractors.
It is my belief that the lumber market trades in a In between the constant mill production and the seasonal surges repeating, predictable pattern. That pattern is created by the in building activity, our lumber market is seeming like a Mexican interaction between and how the chainTheproduction chart illustrates thatsupply interaction. Milljumping production is the most constant, with minor bean, popping up and down amid wicked volatility. lumber dealers, component manufacturers, wood preservers, However random it may seem, price movement is very predictable. reductions July 4th week and Christmas week. and wholesale distributors collectively prepare for seasonal The annual lows first arrive in late August after the supply side increases in lumber demand from new home builders and has liquidated heavy spring inventories. The next possible low or remodeling contractors. is in June. early November, againof due Builders’ and contractors’ peak demand is double April, bottom May, and That is a once function theto inventory The chart below illustrates that interaction. Mill liquidation, this time in preparation for year end. daylightwith to minor work reductions with and July the most desirable weather conditions and uninterrupted production isamount the mostof constant, From mid November through Easter the market rises on 4th week and Christmas week. production momentum. preparation by the supply side for the coming building season. Builders' and contractors' peak demand is April, May and Depending how aggressively inventory shifts from producer to the June. That is a function of the amount of daylight to work supply chain determines whether we get an early Easter top or a July and August taper from heat-induced lower jobsite productivity. with and the most desirable weather conditions and delayed Memorial Day top. September and October uninterrupted production momentum. Along the way are multiple are the second best months due to a push to get framing done forthere year-end close profit outs.opportunities knowing July and August taper from heat induced lower jobsite when to increase or decrease inventory, or by timing your weekly productivity. September and October are the second best buys to beat rising prices or take advantage of falling prices. months due to a In push to get framing done formill yearproduction end close between the constant and the seasonal surges in building That's what I do for you. Show you activity, the WHENour of the lumber outs. market. lumber market is seeming like a Mexican jumping bean, popping up and down amid wicked
Looking Forward...ML
volatility. However random it may seem, price movement is very predictable.
Continued next page
Lumber Production With Builder Jobsite Delivery, Supply Side Inventory, & Lumber Market Cycle This happens regardless of disruptions! 1.4
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