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May 2020 #12250 Page #102
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Lumber Briefs LUMBER BRIEF
LLG's Softwood Framing Lumber Market Forecast It's easy when you know what's coming. By Matt Layman Matt Layman, Narrator Publisher, Layman’s Lumber Guide
Softwood Framing Lumber Market Forecast Week #17 Wednesday, April 22, 2020
Another Dimension
Lumber Market Strategy
LLG Crystal Ball Says Speedy Recovery
Lumber Only Short-Term Bullish
I do not forecast the lumber market, rather how and when Lumber re-sellers prefer high prices because $/mbft folks who buy, sell and produce lumber will act or react. As profits are higher. Producers prefer volume at any price to for the economy and its recovery from this pandemic keep production costs lower. Current production disruption I only need to remember and expect one thing. curtailments have nothing to do with profits, rather buyer Economies are consumer driven. Being the largest economy reluctance due to uncertainty. Mills do not have a clue in the world implies we Americans are the largest group of how much they need to make during stay-at-home time. consumers on the planet. Just prior to this economic burp, The state of Georgia will be the first state to peek out of Americans were spending like drunken sailors, unafraid of the fallout shelter. The world will be watching to see if the personal or economic debt, driving the stock market to virus monkey will jump on their backs or if it is safe to do not forecast the lumber whenWe folks sell, and produce unreasonable valuations. Unreasonable to who, market, you ask? rather how and reengage. will who knowbuy, the results in two weeks; the Those not buying it. Certainly not those investing in it. incubation period of the virus. If the infection curve turns lumber will act or react. As for the economy and its recovery from this pandemic disruption, Ironically, the riots in the streets are not coming from lack up, we'll have a new problem...it was too early. If the I only need to remember andcoming expect one thing.infection curve remains flat to lower, other states will pile of healthcare protection or service. NO, they are from people who want their paychecks back. It is folks that have on and reopen. There will be an instantly sharp economic not been impacted by the pandemic other than financially. improvement. Economies are consumer driven. Being the largest economy in the world implies we Americans Certainly, office work will change, but for us in the lumber For lumber, production is at the lowest point of its business, will be little change and a speedy pandemic disruption response. we get favorable arethere the largest group of consumers onrecovery. the planet. Just prior to this economic burp, IfAmericans were results Why? The housing shortage has gotten worse. Banks need to from Georgia, demand will accelerate with lumber supply spending like drunken sailors, unafraid of personal or economic debt, driving the stock market to lend money to make money and there are plenty of willing just a couple of weeks behind. That is short term bullish. unreasonable valuations. Unreasonable to who, you ask? Those buying it. Certainly those home buyers just waiting for the green light. Short term not being 2-3 weeks, because if not tattoo parlors and CEO's are overly cautious trying to reduce stock market barber shops can open, no question, lumber mills will be investing in it. volatility. They want a steady recovery not a euphoric instant open, making lumber and plenty of it...and Georgia is one spike, but its out of their control. Take airlines for example. of the largest lumber producing states in the U.S. When every other seat and every other row must be left Resuming production will ultimately be bearish for Ironically, the riots in the streets are not coming from lack of healthcare protection or service. vacant to allow for social distancing, what will happen to lumber prices if housing starts are less than 1.5 mm. That NO, they are coming from people who want their paychecks back. Itstick. is folks not results been in a airline ticket prices? They will triple...shortage of availability. is the measuring Underthat 1.5 have mm starts Same with housing...shortage. By the end of summer, weak lumber market (lower prices); over 1.5 mm will impacted by the pandemic other than financially. housing will be booming with all markets and jobsites open. create a strong lumber market (higher prices). What does that mean for lumber? Well, not necessarily Looking bullish. Certainly, office work will change, but for us in the lumber business, thereForward...ML will be little change
LLG Crystal Ball Says Speedy Recovery
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and a speedy recovery. Why? The housing shortage has gotten worse. Banks need to lend money Thoughtfully...ML to make money and there are plenty of willing home buyers just waiting for the green light. LLG 2x4#2 Composite (SYP-E, SPF-W, HF GDF) 2019-Current (Blue) FTP's Forecasted Turning Points: Vertical arrows project times of reversals or accelerations Black graph points project market trend. Wk # 46
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Layman's Lumber Guide...Mat t Layman, Publisher PO Box 905, Belmont, NC 28012
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