https://markets.businessinsider.com/commodities/lumber-price
Down 8% two days ago. Down over 50% from the peak. No doubt prices will remain above trend for a while, but 4X is just another case of speculative nonsense over-amplifying the realities.
All that is to say I don't see compelling evidence here that speculation is the cause of the problem. I can as easily see more benign explanations.
Even if the activity is exactly the same, most people tend to feel differently about an activity because of its motivation. The motivation to obtain large profits is held in much less respect than the motivation to guard against personal shortage. Also, corporate behaviors in general get a lower prior amount of esteem than individual and household level behaviors.
We can definitely talk about whether people ought to view these things differently, but there is little question as to whether they currently do.
Whether you take delivery or not isn't exactly the point, since a speculator could take delivery of something then resell it for profit. I think some people did that for TP and masks...
I think you may get your wish. It's old info, but there are big players who don't see this as sustainable.
I'm not terribly interested in lumber but if you want a good price, with that chart it seems like now may be a great time to buy given the current low. It may also be the last time at that price level for a while. (No promises, just what I'd speculate based on the chart)
Edit: To clarify, this comment is mostly registering my surprise. I see no cabal speculation activity, just a big invite for your neighbor to buy some for their active retirement fund at these levels. Think about that as another variable.
I have to admit I expected to see something idiotic when I clicked through to the link! Like, "pshah, pure speculation!" but instead I am looking at a chart that any broker worth their salt, even a conservative one, might green-light for a client right now, today. So I'm sharing what I'm seeing and no, this doesn't perfectly fit a speculation-cabal mindset.
IOW: This is clearly a price level where your non-cabal types will happily buy in and take a reasonable profit later.
For all we know, the really evil ones could have brought it down to this level. So are we going to pin the blame on those millions of people attempting to prepare for a retirement?
And there's nothing wrong with sharing another perspective, is there, really?
Nobody's even proven, or shown how speculation is the source of the problem. It's just expected that we simply believe that? Speculation could be a side effect for all we really know.
I've been trading technicals for years, and a huge lesson you learn is that everybody has a "why", and everybody has a story, but it always comes late. You then turn around and see the same patterns in nature and start to realize: "Why" can be a terribly unhelpful and misleading direction to take your solutions-oriented mindset.
If you want to cut down on speculation, IMO you need to look into things critically, deeply, and everybody's "why" ought to be first. Was it _really_ speculation? Or are speculators just watching natural patterns unfold and joining the ride?
Metaphorically: Even if it feels amazing to pin the blame on the fox who got into the hen house, do you want to go after every fox in the forest, or maybe understand the fox better--draw the foxes around to another location, or design a hen house with doors on it?
I visited the link with an open mind. But I have experience with charts like that and I can tell you, people will buy here, and the price will very likely go up again. I just think that we can do better, creatively if we want to "solve" the greater lumber issue.
That's a hand wave. You don't want to open your mind and look at different perspectives, fine. But let's not ever think of such a position as a high-quality one.
> There's "we bought a sawmill!" ads here in the rural lands now for fresh sawn green pine and oak; which isn't "lumber" yet in any useful sense. I've seen porches being built that won't last the summer.
The allegedly "kiln dried lumber" home depot has been selling has been criminally wet throughout the last year too. Not only have people been paying through the nose for the stuff, it's been nowhere near ready to use. I had to let boards I bought for building gambrel rafters sit for a month on my covered deck before attempting to cut them to the pattern. And even after that, a bunch of them shrunk another 1/4" from the pattern in the subsequent month of waiting for me to install. Infuriating to pay so much for stuff that isn't even top quality and ready to go. I also had to throw a few away from splitting and twisting during the drying process...
TBH, the lumber yard I worked at you to flood. We would have bundled stacks of lumber float all across the yard. We can pretty much take them the next day and ship them to a construction site. KD-HT lumber is pretty good like that.
Now, most of our large customers just have a reasonable expectation of the product. It's wood. It's gonna warp. It's gonna split. It's like most things like fresh fruits, or meat, or leather. There is a lot of variability.
That is not a recent thing. Home Depot wood has been dripping wet for many years. It's routine to put a screw into it and have water running past the head as you tighten it. I typically buy 50-100% more than I expect to use on the assumption that a good chunk of it will warp as it dries and become useless.
I'm not sure if I should feel better or worse about the situation knowing home depot has been doing this long before the pandemic.
Plywood is fine, but if you need anything you build to last, buy pressure treated at HD, or buy plain lumber somewhere else.
(I bought some 2x4s for a non-permanent project during the pandemic. It was so soft and wet that when I fired a railgun into one of the pieces, the nail went all the way through. That should not happen)
HD sells pressure treated wood that's then kiln dried (KDAT), if you would like to open up a large line of credit with them.
YMMV, but for people who need actual kiln-dried wood it's usually a better option to go to a real lumber yard.
Now that I think of it, it kinda makes sense: it's not the timber that's gotten more expensive, but the service of milling it. For products from relatively more expensive hardwood timber, milling costs constitute smaller fraction of the final cost, so even if milling costs triple, the final product might only go by 50%.
Imagine you've got a project to build a bookcase. You're using cheaper normal plywood for hidden structural parts and nicer but more expensive red plywood for the stuff people will see. You price the whole thing out.
Then the price of wood skyrockets. To keep the price of the whole project under control, you start cutting costs. You use more of the cheaper plywood for the whole project and decide to skimp on the red oak.
Scale that across many projects and you get a paradoxical result where the cheapest goods in a category go up in price while the better goods don't, because people are subbing out the "cheap" stuff for the good stuff.
I'd guess (with some insider knowledge) that (1) there wasn't any prebuilt link to adjust substitute pricing & (2) Depot didn't care enough to adjust pricing.
Both Depot and Lowes are in it for volume and long-term, which is why they don't do things like spike generator prices after hurricanes.
Modern glues in exterior plywood and OSB-like products are amazing, but they don't use that in oak plywood.
There's about four layers between the chainsaw and the consumer. So HD, Lowes, etc all exist at layer 4, sometimes 3 and 4. None of them are going to price cut below what they paid. Call it a gentleman's agreement, or common sense.
What you'll most likely see is buying from layer 3 at say, 50, and selling both 100 and 50 dollar wood together at 75.
Eh it’s always been that way. Warped and with plenty of knots too. It was considered poor quality back when a 2x4 cost $2.50.
I don't know how to calculate if more sawmills are needed (permanent backlog) or if it's a temporary backlog. I figure that speculation is for the commodity traders and maybe some stock / sawmill speculators.
In practice, guess and check may scale better? But I've also been to towns where the sawmill shut down and destroyed the local economy, so guess and check may be immoral (even if it's somewhat profitable)
If the inflation-dudes are right, then at least part of the price increase is permanent. That's why the calculations are necessary: because many people are making many different arguments about the future of this current economy.
The one who can predict the future will make money of course.
Build something, and the whole structure can bend and curl.
That said, it seems like the huge spike in building materials did a very good thing by making many people postpone renovations until prices come down, which should help smooth out the peak-to-trough chart of building construction.
I'm curious why this is. Is it the drying stage, or something else?
https://en.m.wikipedia.org/wiki/Green_woodworking
Its a shame more of that craft isn't going around. Granted, I'm not sure how a greenwood porch would work.
Wood for construction needs to reach an equilibrium moisture point with the outdoor air after its cut.
If its dried outside, it takes months to years to dry, depending on the humidity level and temperature.
The wood is dried because it makes it lighter, and the shrinkage and swelling has already played out during the drying process... instead of when its in place!
https://www.google.com/amp/s/www.businessinsider.com/lumber-...
There's "we bought a sawmill!" ads here in the rural lands now for fresh sawn green pine and oak; which isn't "lumber" yet in any useful sense. I've seen porches being built that won't last the summer.