July - September 2006
Housing and Timber
The Seattle Times reports that the cooling housing market is sawing into lumber prices. Industry data firm Random Lengths reported late Friday that its framing-lumber composite index fell to $301 per thousand board feet for the week, off more than $100 from $403 a year earlier and down from $305 in the prior week. The structural-panel composite index, representing prices for plywood and oriented strand board (OSB), suffered a steeper decline, falling to $274 per thousand square feet, off from $499 a year ago and $298 a week earlier. The indexes have been in decline since about the fourth quarter of 2005, but the downturn has become steeper in the past couple of months. With current prices close to production costs for many sawmills and plywood manufacturing plants, the magnitude of the price drop has surprised many industry analysts.
The rapid pace of the decline in wood-products prices could add an element of adventure for investors this month when forest-product companies begin reporting third-quarter earnings and their outlooks for the fourth quarter.
Sources: 1) The Seattle Times, Random Lengths