Staff Report
Published Jan. 5, 2011

The weighted average price for dimensional Southern Yellow Pine lumber increased 4.4% in 2010, a trend that should continue throughout this year, according to a new report by Forest2Market of Charlotte, N.C.

Prices rose from $252 per thousand board feet at the end of December 2009 to $263 per thousand board feet at the close of 2010.

Prices were mixed in 2010 as the number of grades/dimensions that were down in price nearly equaled the number of grades/dimensions that increased, the report said.

“If we look solely at price, what the 2010 numbers tell us is that the lumber market is just about where it was last year,” said Bill Nocerino, manager of Forest2Market’s lumber division. “If we look beyond price, however, one significant difference emerges — the supply of logs to sawmills. At the beginning of 2010, sawmills faced a log shortage due to an exceptionally wet fall in 2009; as the height of the busy spring season approached, mills were unable to quickly source the logs needed to meet the drastically increased production demands they were facing. Because mills had decreased inventory to minimal levels through the second half of 2009 due to the recession, prices spiked and pushed lead times out weeks and sometimes months.”

Nocerino said sawmill inventories are much healthier this year and that sawmills, traders and treating plants should see modest growth in demand as the market stabilizes.

“In general, we think log supply will be sufficient to meet demand in 2011, and this will keep prices in check,” he said. “Instead of a repeat of last year, we’ll see modest price increases as the busy season approaches, when demand will slightly outweigh supply due to reduced mill production. Prices will then level off and slowly retreat once the hot summer months hit the South.”

Forest2Market is a third-party source of market-price information, supply-chain expertise and consulting services for those operating in the wood fiber supply chain.