Lumber Prices?!

[Solar_HoneyBee0]

Hello everyone. I just wanted to say sorry for the long delay, but work got the best of me and am now just getting time to play catch up. As for my last post, I just wanted to mention that everyone that said Willow was correct. Long story short the guy he bought it from said it was ash and ripped him off. Hopefully he can figure out something to do with it.

Anyways, what's the deal with lumber prices? I mean, i've been in the industry logging for years, but never really paid attention to the lumber prices as it never directly affected me. Well, now that i'm buying lumber (and selling some here and there) the prices are so drastic by me (upper midwest, WI to be exact). How do you all determine the prices that you are willing to buy and sell lumber for? I mean just today I was looking at Red Oak 4/4 x 8' x random widths and the prices ranged from $.45 cents/bft to $3.95/bft. I mean, there was nothing specific separating all of the lumber. From what I could tell the people selling privately don't even separate the grades of lumber out, but sell it for less than companies! What gives?

Well, that was my rant. Thanks for reading. I might be missing something obvious here and I would appreciate it if someone could explain this to me. If I need some hard loving and you need to explain it like i'm a 5 year old go ahead. I'm a adult and can handle the learning curve.

Thanks everyone.

[Ron Wenrich]

Unless you were subcontracting as a logger, you should have seen the effects of lumber prices on log prices and on stumpage.

For hardwood lumber, price is fixed by grade and by demand.  I remember when red oak wasn't in very high demand and we sold it mainly for casket lumber.  Tulip poplar was a higher priced item than red oak.  Also remember when not too many mills cut RR ties.  Markets change.

The 45¢ wood that you are seeing is probably the pricing on pallet quality wood.  I haven't been around the market for a number of years, but that's about where it seems it should be.  Grade prices then get separated by usage.  The yield in clear face cuttings will determine the price.  As the grade gets better, the cuttings are bigger and the percentage is higher in fewer cuttings.

Hardwoods are graded on the worst side, which makes sawing interesting.  2 and 3 Common Red Oak is used in a lot of strip flooring.  Some will go for cabinet and furniture panels.  Yield is at least 50% in clear cuttings, with the smallest allowed cutting 3"x2'.  But, the 50% will only be in a limited amount of cuts.  This lumber is above a pallet grade and the price is dependent on demand.  Some wholesalers won't buy it, due to their markets.  

1 Common needs at least 67-75% in clear face cuttings and a lot goes into furniture and cabinet panels.  Minimum cutting is 4"x 2' or 3"x 3'.  A lot less defect, which makes it more valuable.  The higher grades are Selects, F1F (a FAS face and a 1 Common back) and FAS (Firsts and Seconds).  These need 83-92% in clear cuttings with a minimum cut of a 4" x 5' or 3" x 7'.  This is where the trim comes from.

Typically, the upper grades will be about double the price of 2 Common, depending on species.  But, there are add-ons to price.  The 45¢ is green.  You start adding prices when you have some drying expense, whether air or kiln.  Also added to price is planing and joining.  Quantity also matters, as smaller lots means more time finding customers and is reflected in price.  Specialty pieces will spec out at a higher price due to them being more of a custom item or rarity.  Quartersawn is an example of more of a specialty item.  There are other uses for lumber, such as interior parts for furniture.  But, the usage and quality are general market factors.

People selling privately might not separate their lumber.  They limit their marketplace.  I always tried to match the customer's usage for the quality and pricing of material.  I didn't sell a clear board for a fence board or a knotty board for a tabletop.  A happy customer gives good recommendations and is the cheapest advertising you can buy.  

[Magicman]

As for my last post, I just wanted to mention that everyone that said Willow was correct. Long story short the guy he bought it from said it was ash and ripped him off. Hopefully he can figure out something to do with it.

Please go to  your ID topic and make an update there.  It helps when a beginning has an ending.  I.D. This Tree Please in Tree, Plant and Wood I.D.

[WDH]

There is a weekly report that details the average selling price, truckload quantities, F.O.B. the sawmill, wholesale, that the larger producers get for their lumber.  It is called the Hardwood Market Report.  I use it as a guide to set my retail prices. 

[Solar_HoneyBee0]

Hey everyone. If you look at my original post on the "help identifying this tree" I wrote a bit of an update where I make sure to address that I will try and respond in the future. Please look there for an update. The jist is that I honestly didn't even consider responding since I was asking opinions, but the truth is a forum is only as strong as it's dialogue. I dropped the ball there and will try and engage more in the future.

Ron, that was an awesome explanation. For me personally, with sawing I have seen the cycle where certain species bring a higher asking price, thus i'm sure their lumber would in turn. I have to be honest though too. Understanding the grading system of lumber is a little beyond me and it has certainly been a learning curve. Each day is a new learning experience.

 I should have been a little more clear on my post and that's my fault. You mentioned pallet grade lumber. I honestly don't know what that goes for and i'm sure it's not too pricey, but the lumber I mentioned in my post more than likely wasn't pallet grade. I saw plenty of pictures (i know you need to take pictures with a grain of salt), but these boards looked to be 2 common or better for $.45 cents per board foot.

I guess my post was kind of a rant. I don't get how people sell lumber what seems pretty darn cheap. Even at $1.00/bft it seems rather cheap to me. I knew I wasn't going to get rich sawing lumber, but I never realized it is such a tight margin. Its a learning curve for sure. Any suggestions are always appreciated.

[Solar_HoneyBee0]

WHD,

Hey thanks for that info. I just looked at it and it's really interesting to say the least. If you don't mind my asking, do you set your prices in line with them or do you raise them slightly? Thanks!

[Solar_HoneyBee0]

WDH,

Hey my apologizes for mixing up your name in the previous post. I must have found something different than the Hardwood market report. I just looked at that and It has a $290.00/yr subscription. I might have to think of getting this this in the future.

[WDH]

For small retail sales, I essentially double the Hardwood Market Report prices since they are for 5000 bf+ tractor trailerload sales.  The Hardwood Market Report prices also do not include any freight or hauling charges from the selling mill, handling, storing, planing, etc.

[Ron Wenrich]

HMR is a pretty good guideline, but its more for commercial producers.  In addition to the HMR price, there are premiums.  If you sell to a buyer that's taking only FAS & better, they will pay you an addition to the list price.   Many would also pay for freight.  It all depends on the current demand.  When markets get depressed, the value goes down and sometimes you can't move anything, no matter the price.  Mills that carry a lot of debt or are inefficient will often go under.

There are also niche markets that most mills have.  We produced grade lumber, but also had a niche in casket lumber.  This is where we put a lot of lumber that had a clean face and a 2 Com back.  This carried a pretty good premium.  We also produced long switch ties and bridge timbers for the railroads.  

The problem with smaller mills is their production costs are a lot higher than bigger operations. Niche markets are pretty important to a small operation, and they often cater to the smaller buyers.  Small buyers can go to retail outlets, but the lumber is usually overpriced and the quality isn't too good.  I always marveled at the prices at the local Lowe's and often wondered if they ever sold a hardwood board.  We sold to small buyers, but we had to raise the price due to so much extra labor.  

[Mt406]

Its a different world in Montana at least in my area.
My logs cost more than what selling prices are in the east.
By the ton here its 80-120$ a ton 24-25 ton on a truck approx 4500 bd ft.
My gestment from 50-65 cents bd ft.
My milling cost is about 54cents.
There are 2 mills that under sell me all the time it easy for them there on disability with back and neck injurys >:( >:(
It drives me crazy my taxs pay them to rip me off.
I get the jobs when they want it in a timely matter and quality product.

Scott      

[woodmills1]

I bet the #2 back on casket lumber never bothers the end user.

[Solar_HoneyBee0]

Lol, i'm sure that the users don't care too much either way with that #2 common either. :D Thanks for the information guys. I totally agree that you need to find a niche market for your lumber, that's actually an interesting idea and I might have to look into casket lumber.

It's just crazy to me the price that people charge for timber and lumber. I knew I would never get rich in lumber, but the prices just amaze me. I don't think a lot of the prices you find at big box stores are accurate, but sometimes when i see $3.00/board foot for something I think "yea that's not a bad price." Let me give a recent example. An individual was looking for 12/4 white oak. wanted 3,000 board feet. I don't saw white oak and honestly don't see much around me, but I found some and figured I could make a small profit at $2.00/ board foot. He tells me that he isn't looking to pay that much and found a mill by him that will mill it and kiln dry it for $.65 cents/board foot. This is 2 com or better. Am I missing something? I mean, $2.00 isn't that much for a 3'' thick board is it? Maybe I'm just inflating my prices in my own mind. I honestly don't know. $.55 cents just seems like a waste of time. I don't even feel like starting my mill for prices that low. I'm all for healthy competition, but some of these mills are just crazy. Then I talk to them out of curiosity and they tell me about how they can't afford to work. NO KIDDING?!

Anyways, my rant is over. Thanks for the information guys I appreciate it!

[WDH]

You are not missing something.  Just because some people do not know enough about business to operate with a decent return on their time and investment does not mean that they set the standard for those of us that do. 

[Ron Wenrich]

I'm going to have to say that it depends.  There are varying prices when it comes to grade.  As you go down through the log, your grade drops, and so does the price.  If the guy is selling clean material for 65¢, then he isn't a smart businessman.

We looked at it as an alternate return.  If the price stated was 65¢, then I would be looking at pallet quality that would bring 45¢.  That's a fairly rough grade.  It would be in longer lengths that wouldn't make ties.  That would be a $600 difference on that type of material vs our normal markets.  We would have made it out of low grade logs.  For that price, it would be 2 Com, and nothing better.

If the specs wanted a better quality or something like 3"x12", we would adjust the price upwards to reflect it.  For example, I supplied a 4"x4¼" clear, quartersawn, air dried white oak that was delivered to New York City.  That was priced out at $4.50/bf.  Specs make all the difference in the world.