As we logging contractors make the final push to get loads of wood to various mills, we have seen a warm up in temperatures. Temperatures have been about 15 degrees above normal. With that, as you could expect, our counties have put their weight restrictions on a bit early.
In Forest County, road limits went on almost two weeks early. We then had a period of significant rain storms which was also a bit unusual and early for the first half of March. With that being said this entire last year has not been “normal.”
This month’s theme of building products and OSB seems to be very timely. The United States is seeing record housing starts and with a year of COVID, people spending a lot of time doing home improvements. Hurricanes and tornadoes this year always create an increased demand for all building products. Existing homes are selling at an unbelievable rate, which also drives home improvement activity. Many residents of states that have severe lockdowns due to COVID 19 have made a mass exodus to states that were less restrictive, which has caused a boom in home and real estate sales. All of these events happening at the same time have created the perfect environment for record demand of building supplies and especially OSB plywood.
OSB plywood prices have increased almost five times the amount from a year ago. Lumber prices have followed almost the same trajectory. I have a family member that manages a large lumber yard and building products business. I also have another family member that is a veteran building contractor. Both of these individuals say they cannot keep up with the price increases and the shortage of supply. Both of these individuals also tell me that I must be “making a killing” in my business because of the alarmingly high prices for wood products. When I tell them our delivered prices for wood are less now than when those building products were almost five times cheaper, they look at me in disbelief.
In every sector of the U.S. economy comparable contractors such as carpenters, plumbers, electricians, truckers and excavating companies pass those increased costs on to the consumer and have all increased their rates for services. But yet in the logging and log trucking prices are being reduced. Thinking a little deeper into our state of affairs, it begs the question, “Are loggers and truckers subsidizing our industry to keep these various mills whole?” Loggers are in a supply and demand business but when these products are at record high prices will the forest products industry ever keep loggers economically healthy?
Another subject at the time of me writing this article is the $200 million Logger Relief Bill that passed in Congress. There have been some communications with the USDA to implement the funding that congress authorized. There was a statement made that suggested other Ag sectors needed help possibly before ours. That was a very concerning statement that those dollars for logger relief could be taken and used somewhere else. Hopefully some positive news on that front will develop.
Until next month,