Large gap in Ponderosa Pine Shop #2 and #3 narrows

Probably no clearer example of the impact of wildfires on lumber prices is illustrated in the relationship of two shop items over the past few years.

From 2015 through 2021, the average price gap between Ponderosa Pine shop #2 and #3 5/4 was $180. That average includes a high of $325 in 2015 and a low of $85 in 2017.

Then, in June 2022, the gap between the two began to expand beyond the historic norm, eventually reaching a staggering $1,445 in January 2023.

Like all lumber prices, Ponderosa Pine shop #2 and #3 prices began to elevate sharply in 2020 after the onset of the pandemic. By April 2022, #2 5/4 was reported at $1,955, up $1,190 from its previous high, while #3 peaked at $1,730, creating a gap between the two grades of $225.

At the end of June 2022, after so many other framing lumber prices had begun to readjust lower, the #3 shop price began to weaken. Within 29 weeks, that price plummeted from $1,730 to $515, an average of $42 per week. At the same time, the price of #2 maintained its lofty level, creating a gap of $1,445 between the two grades.

What was the catalyst behind the demise of #3 prices and the support of #2? Not only was COVID-19 spreading across the globe in 2020, but wildfires were also creating havoc in the West. California, for instance, recorded its most severe wildfire season ever in 2020.

The result for lumber producers, especially those that owned their own timberland, was to salvage as much burned timber as possible before those logs were no longer viable. With a propensity for Ponderosa Pine to acquire blue stain, lowering its grade and value, a significantly greater volume of #3 shop and P.99 lumber was processed from salvage logs over the next few years. This also tightened the availability of upper shop grades.

Over the past few months, the output of blue-stained lumber has declined significantly in response to the diminished availability of wildfire-damaged salvage logs, resulting in more upper grade (#1 and #2) production.

Subsequently, the price of #2 has dropped $660 since early July. That, along with moderate gains in #3 since the end of last year, has narrowed the price gap between the two grades to $400. 

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