The ebb and flood of lumber

The last several years have certainly seen no lack of breaking news topics. Thankfully, the Seeley-Swan Valley of Montana continues to offer a mostly quiet refuge from much of the excitement faced in other areas of the country. Topics of discussion seem at times to change like seasons, which are rolling by more quickly with each change. It wasn’t all that long ago that the headlines discussed a record lumber market with homebuilders and home buyers catapulting the industry to levels of demand unseen before. A perfect storm of sudden demand met with labor and transportation shortage issues to drive much of the lack in supply for markets.

If you haven’t heard much on where the lumber markets are these days, it may be because the glamour of record prices has almost completely corrected to previous levels with what appears to be a slightly more elevated bottom end. The rapid rise left in similar fashion after several months of revitalizing profitability. Labor shortfalls continue to challenge the production chain throughout and the log value markets have been squeezed by the necessary corrections to continue aligning with the lumber prices. What hasn’t normalized is the glaringly obvious cost of fuels that is running nearly every piece of equipment needed to turn standing timber to boards. Whether traditional diesel fuels for logging trucks, log processors and forwarders or the electricity that is moving belts and blades, these costs account for a healthy share of the changed market floor from the pre-pandemic era that is not likely to be reduced in the near term.

Prices at the box stores were largely less apparent as wholesale inventories attempted to remain in business as the market contracted and diluted inventories purchased at the premium rates before moving to replenish their holdings. Amidst this move, traditional market cycles are beginning to reemerge in the form of pine board markets slowing and slight dimensional upticks for the early summer building season, which give stable footing after a season of sliding prices moving towards an undefined correction.

A welcome visitor to our beautiful valley this spring was the rainstorms of May and June that may not alleviate, but certainly contribute to a more fire-resistant forest. While the campers and tourism industry probably don’t value the additional rain, it has certainly added needed moisture to aid in fire prevention. The 2022 spring breakup period saw several stop-and-go weeks based on weather patterns that brought unseasonal heat that dried out roads followed by the aforementioned precipitation that slowed re-entry to job sites within the woods.

Logging professionals across our area spent some of this “down” time, if there is such a thing for these folks, investing in professional education endeavors such as first aid, wildland firefighting classes and other industry focused training events. Several area contractors headed south around the same time to assist in combating the early wildfires in various states, which further slowed some of the log market acceleration out of the spring period.

Yet another factor hitting the demand side of our products will be interest rate hikes which have a cooling effect on inflation and the mortgage markets alike. Rising rates will reduce affordability of building newer homes throughout the country, which tends to be less appealing to would-be buyers.

The net effect of all this is the lumber and log markets in our area seem to be settling out in a new territory, perhaps only temporarily, but with an increase to be expected in the final product price based largely on inflation, fuel and labor costs. Log and lumber producers will continue to be challenged by rising overhead costs and motivation levels within the labor markets. Perhaps the best news of all this is that within the wood products industry the struggle of the business makes it feel like home sweet home.