With dropping lumber prices, when will demand for sawmills follow?

[SawyerTed]

Ian fixed declining lumber prices...in a most unfortunate way.  

[bigblockyeti]

Even before the pandemic it was getting hard to buy a work truck. Now its impossible. How did folks ever get along before there seats were heated??

I priced out a '23 F-250 XL, crew cab, 8' bed, 4x4, 7.3gas and a few options to make it work better as a truck.  I don't care about the interior beyond power windows, I'd get it without A/C if that was an option and rubber floors are easier to keep clean (when actually working) than carpet.  It has an MSRP of $59,8XX and the dealer will sell it to me for that but I'd have to wait for quite a while to actually get it.

[SawyerTed]

I suspect that CTLs. mini excavators, telehandlers, work trucks and lots of other equipment, building materials and home furnishings are going to be in high demand/short supply due to Ian. 

Watching the news a few minutes ago, in the background a truck with two or three CTLs rolled through behind the reporter.

[stavebuyer]

I have been nursing my 150k mile truck along for about a year and half. I absolutely refuse to play the games being played. I imagine a sizeable percent of the backlog is people thinking the inflation game will continue. "Hey, I can buy stuff, write off the depreciation" and it will actually appreciate. Yep a few lucky folks cashed that covid check. Thing is the pendulum always overcorrects and it is now on the downswing.

Covid comes along about every 100 years or so. That last 2 years were an anomaly. Household debt is moving into record levels. The bubble is going to burst and soon. You got 100k and need a truck than by all means enjoy the ride. Think the 100k truck used will be worth more than 50K 2 years down the road, you may be disappointed.

[Walnut Beast]

Everyone crying about a 100k diesel truck better get use to it. Everything has gone up. We are on new levels on everything and if and when stuff comes down I seriously doubt you will buy a 100k diesel truck in two years for 50k. And if it's dually truck they hold value even more

[Southside]

I am old enough to remember both 2008 and the '80s farm crisis.  History will repeat itself again.  

[Walnut Beast]

I do know one thing the one acre of land I'm selling for 44k will be worth more than that 100k truck diesel or no diesel in a few years 😂

[longtime lurker]

I am old enough to remember both 2008 and the '80s farm crisis.  History will repeat itself again.  

History always repeats itself. I'm old enough to have managed 18% interest rates in the late 80's here during "the recession we had to have" which was government induced. That hurt, but overwhelmingly business confidence was strong. We did need it too... that couple years of treasury induced pain saved us a big crash during the Asian/Japanese crash on the 90's.
I'm not old enough to have managed the inflationary spiral of the 70's though so my personal playbook doesn't have a survival guide for what's ahead yet. But I'll manage, cuz I'm flexible, and inherently fiscally conservative, and know when to put it all on the line and when to duck for cover. 
What gets me though is that I'm just a dumb old sawmiller who knows that history repeats itself... and there's a lot of supposedly smart people who manage economies who can't seem to learn new ways to avoid the same cyclic disasters.

[moodnacreek]

History is all we have. Who can see the future? History tells us what could happen next.

[230Dforme]

Had structural steel fabrication and erecting company for 30 years, did $ 1,000,000 jobs.
Minimal equipment owned, union iron workers, rented shop, $800 month
Doing tree work now, good local equipment.
Bucket truck, dump truck, chipper, $ 25,000
Can't believe what people spend on equipment 

Me and Moodnacreek think alike, just wish he'd 
move to next door to me 😳

[Brad_bb]

I've noticed a couple ads lately of someone who ordered a mill a year ago, and are selling it new straight away.  It almost seems like they were speculating.  Either that or really changed their mind.  But seemed more like speculating.  

I put off my mill upgrade when lead times started backing up.  I've held off.  I think there's going to be a lot of lightly used Woodmizers and other mills on the market over the next few years.  I think that will make new mill sales crash.  They may have to reduce staff at places like woodmizer until thing start normalizing and the flood of mills in the market  gets absorbed.  Talk about creating sales, cash flow chaos!  Woodmizer may have had a great 2-3 years, but will probably pay for it with low sales for a few too.

I don't think I'll come out ahead as when I do upgrade mills, even if prices are low, I'll need to sell my current mill, so I'll come out slightly behind probably.

[longtime lurker]

Dunno about that, I think the reason for the long order delays with most manufacturers is that they didn't ( or couldn't due to supply chain issues) really increase production . So they've made no more equipment than they would have anyway...it's just the wait list blew out.

So the bottom falls out of wood prices, orders get cancelled or slow down, they can just carry on regardless. And yup there'll likely be a lot of low hours second hand units come onto the market in the next few years. But that's not unusual either because people are always cashing out or trading up. It won't push new prices down, it will mean though that a lot of speculative or hasty buyers are going to take a hit and that's not a bad thing either, if a few don't get burnt it will happen again 

[YellowHammer]

Inflation - Rate of increase in prices over a given period of time.  Inflation is high right now, so prices are high.  The Fed is trying to curtail it, but....

As inflation goes up, prices go up, and yes some people will back out of things, but many will try to adjust and save money by doing DIY projects.  I'm already seeing it here, I get many more "Will you saw these logs up for me because Lowe's (retail) lumber is expensive?" calls than I did just a few months ago.

I imagine many of them next going to websites and looking to buy small sawmills for themselves and increasing WM and other's backlog.

We peaked out at a tad under $100K of log, lumber and supply purchases in September because of high wholesale prices (ain't no prices going down here in Alabama).  However, we also made more net profit due to increased sales this September than last year's September, due DIY woodworkers demand for high quality lumber as opposed to skyrocketing ready made furniture and house supply costs.

The only thing higher than lumber prices are furniture prices, so if a woodworker wants stuff, they will build it and save big money in the long run.  If I have to pay more for my supplies, they have to pay more to buy it.  I'm not in business to lose money.  So I'm seeing both the wholesale and retail side, and it's just painful to me as as a Mom and Pop business writing big checks every day to get logs and stuff, and it's painful for the customers who have to buy it.  

I'm sure prices will drop at some point, but it's not next week, I know because I have some stuff coming in.  First load? Exotics from Ontario, Canada tomorrow, 0900.  Time to get the checkbook out.  Sigh.... 

     

[Andries]

"Exotic hardwoods from Ontario, Canada".
Well, now the world really HAS turned upside down! 🙃
(I realize it's an example of what happens when some joker tries to price gouge YH.)
Not too long ago, I was looking for French doors for a hall closet. The best doors for the money were at Menards in Fargo,ND. Sure enough, the label said "Proudly made in Quebec, Canada". Up here, we're used to the volume discount that large corporations get, and shrug it off when our huge American corporate neighbours can sell for less money than Canadians sell to each other.
Inflation will last a while, it's a tricky beast that bites back hard when it's treated with harsh measures. Look at Japan's financial history over the last fifteen years.
The other 'disrupter' is the retreat on globalization. If 40,000 Ford SuperDuty trucks can't be sold for a lack of computer chips, well, it doesn't take long before your President announces funding for chip plants in the USA. The same can be said for vaccine manufacturing plants.
My flawed, cracked and foggy crystal ball says that prices and demand will stay up for quite a while and that supply issues will be un-stable for about the same length of time.
Unless they don't.  🤔

[Cedarman]

Prices for red oak and poplar logs are down.  Maple and White Oak holding steady. Ag products are down this past week. Rents are down a smidgeon. Fuel has been dropping until recently. I think inflation month to month is very small. But year over year is up.  Energy is a big component in shipping and shipping costs should not be going up.  Instead they should be going down.  Price of cedar logs has peaked.  Wages are not rising in our area.
In one month there is an election.  Will see if there is a major party change in the house and senate.  Don't know what difference that will make.
The money flooding in is going to the already rich and they can only buy so many trinkets.  Raw land may keep going up as that money looks for a home. Just my perspective.
Seemed to be a lot fewer cars on the interstate in Mo last Tue.  People seem to be driving less.
Cedar demand still high, so we will keep sawing.
Our 26 year old LT30 super is still sawing about 1200 hours per year as good as ever.  So all those old mills can still be productive.  So I think there will be a glut in the near future.  Prices will drop IMHO.

[kantuckid]

I bought 4 different species (packs) of hardwood lumber last week, one dropped, one stayed the same, and two were higher.

I bought a pack of 8/4 soft maple today, it went up since last time I bought it, fairly recently.  

I'm getting some 8/4 walnut tomorrow, same price as last month, nearly $9 per bdft.

I don't do much softwood, but the hardwood and exotics I have to buy are still painfully high.

I have my second truck from Canada coming in next week because I can't get decent exotics at wholesale prices in the States.  It's less expensive for me to bring it from Canada to Alabama, than from North Carolina to Alabama.  Go figure.

Exotics mean what species? 28 miles from me is Morehead, KY and the 2nd largest hardwood center in the world and Hickory, NC, thats #1, is maybe closer to you. Canada seems a stretch. "They come here to KY for hardwoods from Canada."   

[stavebuyer]

Green FAS 8/4 Walnut is $2.73 in this week's HMR and 2A is $.90 and all grades continue in the downward price spiral. Thats about half what brought less than a year ago.

[OH logger]

How long you think they'll go down stave? I mean walnut and everything else 

[YellowHammer]

I received a load of mahogany, sapele, zebra wood and Paduak from Ontario, Canada this morning.  All were less expensive than any other prices I could get in the US, some very significantly so.

Shipping was FREE.  Zero$$ from Canada.

Two of the exotics dealers I had bid on the package, (I take competitive bids on exotics from about 4 to 5 different suppliers, in both the US and Canada, for any orders over $10K, anybody is welcome to bid), added significant freight charges, one was $2 per bdft, the other was $1 per bdft.  None could fill my order at the same price, not to mention time frame, and all the spieces, including shipping and maintain quality.  I have no preference on exotics dealers, they must compete on price quality and delivery schedule.  Someone give me the names of places they think are viable, I will call them tomorrow.  I need Bloodwood and Spanish cedar ASAP.  At wholesale prices.  The grade is LWC (Long, Wide and Clear).    

I've tried all the well known ones and many of the lesser ones.  Any on Google and many that aren't. The ones I have dealt with are in several states including Alabama, Tennessee, Mississippi, North Carolina, and Canada.  One place  that couldn't give me a ship date claims they are the largest exotics dealer in the US and supplies wood to Woodcraft and Canada.  It's one of two I have used in North Carolina.  They have screwed me on the last two orders and I'm tired of it.  The last orders orders from them took many, many months and they kept telling me "two weeks,". Then they sent me a whole load of purple heart, all 38" long and 4" wide, which I assume were cutoffs from a more valued or bigger customer's order.  What a joke.  They are one of the reason I've decided to diversify, they had me over a barrel and it isn't going to happen again, because I had orders from customers, and these guys hung me out to dry.  They are officially off my list.  They also went up significantly on price.  Either way, I wouldn't buy from them anyway, anymore.  

Remember, I'm buying at wholesale prices and selling retail.  Most of these places aren't cutting prices down for wholesale anymore, or their wholesale prices are approaching retail at least to small operators like me.  I'm tired of working deals with companies like this, they can take a leap.  I must be doing something right, the owner of Woodcraft in Birmingham called a few months ago asking for me to supply them exotic wood because, in his words "my quality is higher and my price is cheaper" than anyone they could get exotics from.  Basically, I was beating their procurement team and they wanted me to work for them.  By the way, one of their wholesalers is the same place in North Carolina that was jerking me around, so at least it's good to know I wasn't the only one.  

Last Wednesday 8/4 FAS walnut, kiln dried, was $8.60 from one source and $10.70 for prime 8/4 from another.  One source is the second largest hardwood distributer and dealer in the south US.  I paid the $8.60 plus a hefty fuel surcharge that brought it to nearly $9 per bdft.  Not surfaced, rough sawn.

There is a long delay from green wood in the HMR to wholesale sales prices.  The companies who have inventory must clear it.  They clear their inventory by selling to companies like me, at the wholesale prices they paid yesterday, not the prices of today.  So then I set retail prices based on the prices I pay, so there is a significant trickle down time.  I adjust my prices based on a detailed formula and database, and its black and white.  I am not seeing the HMR reflected prices in KD wood from the wholesalers I'm buying from.  It will be interesting to see how long out takes to filter down to business like me.  

KD prices as of Wednesday or the week before from a major southern wholesaler in that I bought high 95% yield FAS from.  These guys supply retailers, that's their business, have a 5 day a week truck delivery route, they are not hacks, they are big. I have two of these retail supply companies that I am in coverage range and both have approximately the same prices, give or take.  I purchase from either based on their prices or availability.  
  
Walnut 8/4 $8.60
Wide Sort red oak $3.49
8/4 white oak $6.75
4/4 basswood $3.15

I'll repost prices as they drop.

I bought 2 loads of logs last week, basswood mostly, (because of the price listed above), and some assorted other stuff, from $1.85 and down, on the log.

[Southside]

Yea, but can they get you any Sweet Gum?   :D

[longtime lurker]

I'm seeing similar kinds of thing here. I sell some products at wholesale, buy others at wholesale for resale. There are some weird things happening in the market - the AUD is low which normally pushes imported materials prices up, but I'm seeing some pretty good deals floating around which look pretty breakeven from the wholesalers point of view (to me) unless they're trying to offload stock to reduce exposure or they picked it up cheaper than I would expect.

I'm seeing low demand for domestic cabinet and joinery species, while demand for upper end commodity stuff like premium domestic decking and flooring is high. That may be more "demand for my product" than general demand though, although an abnormally wet year to the south of me has meant a lot of the big mills have starved for logs.
I can't cut enough large end section to keep up with demand, either my own retail or the couple wholesale guys I still deal with. I'm slugging them on price and still they come.
Government intervention in the fuel price ended last week, so non business fuels jumped 20c/litre. That's going to bite into a lot of household budgets. Add to which yet another rate hike is expected today, that makes 6 rises in as many months and effectively doubles the amount of interest paid on a household mortgage.

Housing approvals for the last quarter are overall higher, but a lot of that is apartments which tend to have a longer planning time. Detached housing approvals however have fallen 4.3% on the last quarter, and I consider that a more timely barometer of whats ahead.

What Im expecting here is a gradual coast to a stop, not an overnight crash. Of course one good cyclone - and we haven't had any for a couple years so its overdue - can override national market trends with local demand. I'm not worried about where things are headed... but I am getting mindfull about writing out cheques for stuff that might take an extended timeframe to give me a return. 

[YellowHammer]

Here's an interesting follow up.  After I posted this at 9 pm, I sent a few emails out for the Bloodwood and Spanish cedar.  It's now 9:19 pm, guess who has already replied saying they would get me a quote first thing? That is customer service.  

I agree, I have been selling off my high priced inventory to hopefully track downward pricing on the stuff I have to buy.  

I was sawing basswood today, I hope I can sell it more than I paid for my logs.  Scratch that. I won't sell it at a loss.  

[longtime lurker]

 I've got a couple packs of Spanish Cedar floating around in stock somewhere... it's on the just not moving list. Not enough for a TEU though.
If Bloodwood means the Australian species that's right up there on the can't keep up with demand for flooring and decking list... it looks like Reds are coming back into fashion domestically 

[customsawyer]

Had a contractor stop in yesterday to get a mantel for a new house he is about to finish up on. Said he is still booked out for over 2 years. Ordered material for the next house and was quoted a little under $3.50 for 2x4x8s and about $12.00 for 7/16 OSB. I think the houses are going to cost about the same in the end as the high priced material houses did last year with the higher interest rates. I'm getting more and more customers bringing in loads of logs to be sawed. If that is even possible. I've had a few months of record sales this year but I should be due to having raised most of my prices. A few years ago I was sawing for 35 cents per bf. Now I'm having to charge 60 cents per bf. That's almost 100 percent increase but I don't have any options  due to my raising cost. I don't know what any of this means other than I'm going to go with the KOKO rule of logic. (Keep On Keeping On)
Lets go get to sawing.

[moodnacreek]

It is funny how my tiny operation follows the world wide trends. For the past several years I can't give away red oak or cherry or any thing else red or even called red something.     The fad chasers only know white oak and black walnut.