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Don’t Forget! You Saw it in the
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September 2020 #12254 Page #108
Lumber Briefs By Matt Layman Publisher, Layman’s Lumber Guide
Everyone Knows Why 2x4s Are $1000, Right?
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re you feeling like we are in a great big room, pitch dark and no one can find the light switch? Well, let’s try to find one. First off, everyone knows how we got here, right? You know it’s not COVID, or the economy, or housing starts, or DIY, or interest rates, or the stock market. NO! None of those. We act like the lumber market is a living entity that giveth and taketh away at will. Why in heavens name do we ask for the market to calm down and drop price? Every one of us together creates “the lumber market.” We are talking to ourselves. Sawmills make lumber and everyone else just moves it around until it gets nailed down. Ideally, that would happen with normal disruptions like COVID, natural disasters, social unrest, recessions...yes, those are the normal events that occur in a functioning society. Where we always get into trouble is GREED. We want more, bigger, better, prettier, faster, cheaper. I suppose that at some time in every civilization someone rose up to challenge the big dog on the porch. Eventually, the big dog goes down, but not necessarily away. That brings us back around to the reason for $1000 2x4s...LACK OF CANADIAN LUMBER. The U.S. Lumber Coalition gnawed at Canadian producers for 30 years until they cried Uncle and shut down 25% of their production. The US proved again to the world, we are the big dog on every porch. Don’t punish Canadian mills for having a working relationship with their government. If Canadian production was at the same level as three years ago, lumber prices would easily be half of today’s. If you think $1000/mbft is extravagant, think again. The next wave of COVID will be what we expected the first time...less lumber demand, but we have AT LEAST a recession coming, as soon as the stimulus money tree drops its last load. However, less demand does not guarantee over production. The problem today is, North America does not have a back up plan for lumber shortages and mills are tasting the financial benefits of limiting supply. Why give that back and risk over supply...again? Thank the U.S. Lumber Coalition.
Will We Get More Production? Why Would We? If you were a lumber mill and had seen decades of price volatility, as production grew year after year, as though it had an obligation to remain in a defined price range that frequently flirted with losses...if you have had a career of that, this lumber market is a game changer. Mills are realizing, less is more. We all know the cure to higher prices is more supply. But think about that for a second. In five months, just by not making any more lumber, the return to sawmills has tripled. These Continued next page
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