May 2, 2025 Lumber News
SYP The SYP lumber market is finally showing signs of softening for the first week this Spring. Although the average for...
Cedar Trees in the Bible, Deforestation, Tariffs, Economic Optimism, & Mortgage Rates…
What is the most mentioned species of tree in the Bible? Olive, gopher, fir, sycamore, or cedar? With 51 references to cedar, this species is mentioned more than any others species in the Bible. Many mentions of cedar in the Scriptures portray it as majestic and highly valuable tree in Israel with a large amount of cedar trees growing in the northern region known as Lebanon. When David wanted to build the Lord’s house to replace the tabernacle, he pondered how he was living in a house built of cedar while the Ark of God remained in curtains. When his son Solomon began actual building of the temple a number of years later he agreed with King Hiram to hire the Zidonians who were very skillful in hewing timber. Evidently even though the cedar trees grew in the land of Israel, the Israelites had not developed the logging skills needed to harvest the volume of the cedars of Lebanon that would be needed for this project. Hiram’s people also had the seamanship skills to bring the lumber on floats down along the coast of Israel. It seems that the cedar trees were large enough in diameter and tall enough to be cut into load-bearing beams as well as boards for paneling on the walls.
As mentioned in last month’s notes, I was stunned by the amount of wood that was processed annually by a single sawmill in the Southern United states. This led me to questions like “Where is all of this wood being used?”, and “How sustainable are our forest lands in the United States?”.
To begin exploring these questions, first I want to give some context. The continental United States has around 1.9 billion acres of land. 55% of this land is taken up by agriculture crop land and pastures. Another 13% is taken up by railroads, highways, airports, national parks, military bases, etc. Urban areas only take up around 4% of the US; but are growing at a rate of around 1 million additional acres a year, and have more than quadrupled since 1945. Leaving 28%, or 539 million acres for our trees (Forestlands).
Before the European colonization of the United States, it is estimated that about half of the land was forested. This means that the United States has lost almost half of its forestlands in 500 years. Over 60% of this forest land lost was converted to agricultural land to grow crops. In 2023, the US harvested 93 million acres of corn; and nearly half of that corn went to ethanol (fuel) production.
Now, back to the forest. The United States is the world’s largest consumer of forest products. Of course, in our line of work here at Lumber Link, wood consumption is a daily reality as we sell lumber by the truckload to builders, truss shops, pallet shops, lumber yards, and individuals. Nevertheless, all of us are consumers whether we notice it or not. In fact, if you are reading this, consider yourself a forest product consumer, as the paper these words are written on, came from a tree. And we sometimes forget that trees are producing the very oxygen we breath every second of the day. How incredible!
Thankfully, due to God’s design, trees are a renewable resource. All of the major forest product companies harness His design by planting new forests. The investment in tree planting is a long-term one; southern yellow pine matures to harvestable size in about 20 years whereas SPF (grown in northern US or Canada) requires 50 years to reach maturity. Either way, it is an investment that they must make as they would soon put themselves out of business if they neglected the replanting of trees. As for softwoods, 70% is used for housing, 11% for non-residential type building, 14% for pallets and containers, and the remaining 5% is unknown.
The United States is now the largest producer of softwoods surpassing Canada last year. But Canada is still very close behind… which leads us into our next section.
With spring being now here and temperatures rising, construction project numbers are anticipated to rise a bit as well. President Trump’s tariff threats remain the “talk of the town” and keep Canadian lumber prices an ever-moving target. Although we have not seen any notable price surges in Canadian SPF (Spruce, Pine, Fir) that have lasted, prices on 2×4 SPF continue to climb while 2x6s steadily make their way down since hitting peak prices in December of 2024. We expect a trend upward as demand continues to grow and supply lessen.
SYP may just be riding on the coattails of the Canadian market as there has been a very steady price increase in both high and low grades through the first few months of the year. #4 SYP price continues to grow closer and closer to #3 even with #3 supply being very tight. #2 and better grades show no signs of decline as well. Even though SYP is produced domestically and therefore will not be subject to any potential tariffs, SYP mills tend to use market volatility to their advantage. This means that if a tariff is officially put in place, prices for SYP would likely rise by $500 to $1000 per truckload overnight. Of course, this would probably only last a few weeks at the most until prices would stabilize again.
During the year 2024 there were six SYP mills that closed in the southern United States. The companies that owned these mills closed their older less profitable mills because demand was lower the last few years. One of the interesting things about the newer mills compared with the older mills is that they can produce the same volume of lumber with a crew of 60 workers compared to a crew of 100 workers that ran an older mill. Also the percentage of low-grade lumber that is produced is dramatically reduced by employing better technology in the milling process. For example, I heard of one mill that used to produce 6 to 8 truckloads of low grade every time that they cut 4x4s but after they upgraded their sawmill equipment they only produce two to three truckloads of low grade per production run. Obviously this is a significant advantage for the sawmill since they are typically losing money on every load of low grade lumber that they sell.
The ripples caused by tariff talk also made their way into the panel market as well as first quarter 2025. The price trends looks something like a roller coaster. Weekly double-digit price decreases (per 1000 square foot) in January were quickly followed by double-digit price increases each week of February along with shorter supply in some thicknesses. Where the price stabilizes at will hinge on how, if and when, new tariffs go into effect.
This year so far there has been some optimism surrounding pallet demand from some of the shops that we are hearing from. Some are experiencing a 10-20% increase in orders. Several of the largest pallet companies in the US have shared that though they are still expecting the pallet market to remain very competitive. They are also expecting overall challenging economic conditions to continue through at least the first half of 2025.
With the continued efforts of many factories that use pallets to automate their production operations, the demand for higher quality pallets has been increasing. In some areas, pallet recyclers are shifting to dismantling and reclaiming the best quality used boards and using them to produce combo pallets, which contain both new and used lumber. This is allowing recyclers to sell more of their pallets as Grade A which often will meet the needs of the more automated production lines of pallet users.
The supply of raw material for pallets is a concern that shops across various regions share. The hardwood cant price trends seem to vary a bit by region but overall seem to be holding fairly steady in the $450-$500/mbf range. Pallet grade softwood tends to be moving up in price as we mentioned above in the SYP section.
We are continuing to hear from sawmills that no longer have an outlet for their cross-tie production. With tie inventory at a 7 year high, some of the buyers are discontinuing purchases from some mills. In some areas, price has been dropping a bit for the mills that are still producing ties.
In the past year there has been an increase in hardwood lumber exports to other countries of 6%. Total exports in 2024 was around 1.22 billion board feet with the top three countries purchasing our lumber being China, Canada, and Vietnam. The most exported species is Red Oak followed closely by White Oak.
Hardwood log exports also increased with the largest buyers being the same three countries. The overall increase in log exports was about 13% to a total of 418 million board feet. Walnut and red oak were the most exported log species.
Overall, average hardwood lumber prices have started out the year with a continued slight downward trend. Looking very broadly at demand for hardwood lumber, there are still no categories that have strong demand. That being said, mills who focus mostly on white oak, walnut or other higher value species have been experiencing good demand for their production.
There are some things that most of us consider to be necessities in modern America; electricity, toilet paper, running water, and of course food. These things are likely to be purchased if times are tight financially or not. Then there are other things that may be either a real need or just a want. A new pickup truck, an ATV, and maybe even a new house. This type of purchase for many might get pushed out into the future until finances are less tight. It is interesting to notice that in the first part of 2025, sales of new pickup trucks and ATVs continue to be very slow which indicates a slower economy persisting at the present.
In January of this year the average 30-year fixed mortgage interest rate increased to 6.96%. This is up about 1/3 of a percent from January of 2024. This continues to slow the rate of new home construction simply by pushing the monthly payment on a new house out of the affordability range for many would-be house buyers.
