Ordering and Q2 Market and Product Update
Q2 MARKET & PRODUCT UPDATE
We have all been impacted by the relentless increase in lumber pricing over the last fourteen months. Driven by a global shortage, demand for building products has dwarfed the industry’s ability to supply. The price index below shows that we are sitting at yet another all-time high.
Over the past week, there has been much discussion surrounding a 30% price correction. Lumber futures have dropped by a third, and everyone is wondering what impact this has on the price of lumber and the product sitting in dealers’ yards. Lumber futures are not directly related to the level at which the cash market trades.
The cash market is influenced by variances in long and short-term demand, the availability of trucking/rail, on hand inventory levels – at the mills, in the distribution channel and in the lumberyards, demand & production in the treated market, amongst many other factors, one of which is the price of lumber futures.
Currently, plywood & OSB have remained flat in cost, but dimensional lumber has shown signs of a correction downward, with spot pricing varying up to 31% depending on the SKU.
As costs rose daily, lumber dealers continued to purchase products to ensure they had enough inventory to supply their customers, while trying to not be in a long inventory position at the highest cost the market has ever seen.
Due to heavy demand and three-to-six-week lead times, inventory values will continue to climb until this previously purchased product finishes landing. If the commodity continues to trade at a discount, this product will be purchased and average down the cost of the lumber dealer’s inventory over the next 3 to 6 weeks. At this point, market pricing will begin to drop.
We are at an all-time high and have expected a correction for quite some time. Supply and demand fundamentals in Canada and the United States are still very strong, therefore we believe that price may come off but will not crash.
Our Commitment to You
Our commitment to you remains the same. We will continue to invest in inventory to meet your needs and use our average costs to price your projects.
As we procure and received less expensive products, we will pass the price relief on to you. Effective July 1st, we have decided to move to weekly price letters. This will allow us to stay as close to the market as possible and pass on savings quickly as they become available.
Engineered Wood Allocation
Engineered wood products (EWP) continue to be subject to allocation. This has become a significant headwind, and manufacturers do not see this situation improving for 12–18 months. We are allocating product specifically to our customers’ projects and have reserved our EWP allotment by customer channel in the following manner:
• 80% to the Builders
• 10% to Build-It-Better Pro – Contractors, Trades, Specialists
• 10% to Build-It-Better – complete private home builds
• 0% to retail customers
Our team has been pursuing detailed shipping schedules more than ever before, and we appreciate you providing as much advanced notice as possible.
Truss Lead Times
Although trusses are not technically on allocation, the demand for trusses is overwhelming. We are currently booking into October. Our goal is to reduce the lead time significantly. Your sales representative will be calling you to review all your truss needs and confirm desired ship dates.
Inflation has put pressure on everyone’s cash flow. To have the inventory our customers need, we have had to invest exponentially. We understand you are going through the same situation and as inventory investments increase, so do accounts receivable. Working capital is the key to all healthy businesses; therefore, we want to formally thank you all for being diligent in paying your accounts in full and on time to help us serve you better. We are very fortunate to have an excellent customer base and are very appreciative of your efforts.
Price Increases and Product Availability
• Lumber and Sheathing → Lead time 3-6 weeks. Rim Board – not available at this time
• Engineered Wood Products → Lead time 12 weeks
• Trim and Doors → Trim – Lead time 3-6 weeks. Doors → 12-16 weeks
Price Increases coming July 1st, 2021:
• Finger Joint – 20%
• Poplar – 20 to 50%
• MDF & Misc – 8 to 10%
Thank You for Your Business, Loyalty, and Support
We kindly ask that you continue to work directly with your Turkstra Lumber representative and give as much lead time as possible for upcoming projects, designs, and orders. The more time and detail we have allows us to fulfill your needs, communicate delays and offer product substitutions.
As the market evolves, we will continue to be proactive in our communication, and you can rely on us to be transparent in all our business dealings.
Customer Service Hours
Monday – Friday: 7:30am – 8:00pm
Saturday: 8:00am – 4:00pm
Our Branch (Store) Hours are the following, with *Curbside Pick-up* available:
Monday – Friday: 7:30am – 5:00pm
Saturday: 8:00am – 4:00pm