MethodologyContact usSupportLogin
Southern Pine lumber has traded in a historically narrow range this year, and traders anticipate that trend to persist through the balance of 2024.
A widespread perception that price volatility will remain minimal through the fourth quarter has governed conservative trading strategies throughout the distribution pipeline this summer.
The Southern Pine Composite Price monthly average peaked in March this year at $396 and hit a trough in July at $333. The $63 trading range narrowed significantly from the $116 span in 2023. The lack of price volatility in Southern Pine has been evident in the broader North American market this year as well.
Southern Pine traders anticipate supply and demand to maintain a balance close to equilibrium throughout 2024. Many note that demand in the South could strengthen as the fall building season approaches and cooler weather allows builders to expand job site activity to lengthier workdays.
Further, the latest economic trends indicate the Federal Reserve is likely to lower the prime interest rate at least once before year-end, which could give an ailing housing market a shot in the arm.
However, few traders anticipate demand gaining any appreciable ground on supplies in the months ahead, even if consumption shows a seasonal hike.
Recent mill curtailments – both publicly announced and more quietly executed – helped supplies align with lethargic demand in August. This helped prices rebound modestly compared to July.
The curtailments helped mitigate rising production capacity that has emerged across the South this year, with several new mills coming online.
Many mill sales managers, however, note that the conservative trading patterns that have persisted throughout 2024 are unlikely to change as long as buyers are able to cover immediate needs within a reasonable time frame.
While the curtailments have eased accumulations at the mill level and reduced the pressure on producers to clear buildups, buyers have continued to procure the tallies they need, usually by making a few additional phone calls.
As a result, many producers have been hesitant to raise list prices aggressively, noting that resistance to steep hikes could undermine sales. Buyers, meanwhile, have addressed their most pressing needs with little fear of substantial downside risk.
But most feel little to no urgency to deviate from the lean inventory positions they have operated with all year. This is especially evident among treaters. Speculative purchases in the secondary market have been minimal this year as well.
Most traders see little prospect for change in trends through the fourth quarter. Any price surge would likely prompt mills to resume operations at curtailed production lines, and supplies would catch or overtake demand quickly, many noted.
The Southern Pine Composite is on pace through August to post the lowest annual average since 2015. Historically mild volatility is not unheard of in the Southern Pine market over the last decade. For example, the Southern Pine Composite traded in a $37 range in 2017 and a $65 span in 2019.
Want to learn more about the lumber market, prices, or forecasts? Check out our dedicated page for timber/lumber, other wood products, or speak to our team about accessing our news, analysis, forecasts and more.