![lumber prices skyrocket lumber prices skyrocket](https://www.centralillinoisproud.com/wp-content/uploads/sites/57/2021/05/lumber-prices.jpg)
#Lumber prices skyrocket drivers
Per the American Trucking Associations, the US was short 60,000 drivers in 2019 and that number is anticipated to increase to 100,000 by 2023. Will Soaring Energy Prices Eventually Impact Delivered Wood Costs? This resulted in the permanent removal of over 1.5 million tons of (what had been) stable hardwood demand from the region, and fiber prices have fallen in response. This is not surprising, however, as two large mills in Wisconsin Rapids, WI and Duluth, MN were both shuttered, and many other mills in the area curtailed production in the wake of the 2020 lockdowns. While the increases haven’t been nearly as acute, quarterly delivered fiber prices have largely trended higher as well - with the exception of the Lake States. After bottoming in 2Q2020, oil price has surged quarter-over-quarter (QoQ) since the peak of lockdowns.
![lumber prices skyrocket lumber prices skyrocket](https://www.castanet.net/content/2021/5/screen_shot_2021-05-12_at_10.34.45_am_p3530372.jpg)
Note the largely independent trends between regional delivered fiber prices and WTI oil price over the last two years.
![lumber prices skyrocket lumber prices skyrocket](https://www.base-4.com/wp-content/uploads/2021/05/Skyrocketing-Lumber-Prices.jpg)
(The chart below illustrates a total change in price as a percentage, not a change in actual dollars.) To get a picture of WTI oil price performance compared to delivered wood fiber price performance across the US, we indexed weighted average delivered regional prices along with weighted average WTI oil price to get a fair, but broad, representation of these products on a quarterly basis. For instance, log prices in the South are now at a 14-year high amid strong demand from southern sawmills, and wood chip prices in the Pacific Northwest (PNW) have soared in recent months as limited timber availability squeezes suppliers on both sides of the US/CAN border. Regional wood prices have also been volatile over the last year. Given the conflicting crosscurrents, “Uncertainty remains rife in oil markets and the price of WTI is soaring,” ’s Tom Kool wrote. In an attempt to blunt some of the impact of sanctions, the White House has partially shelved its animus against the fossil energy industry and quietly asked US producers to increase output the Biden administration has also more openly pled with regimes like Venezuela and Saudi Arabia to boost production. While the United States initially refused to cut imports of Russian oil (671,000 barrels per day in 2021), there is a prospect of some 4.7 million BPD of crude flows (Russia’s average crude exports YTD) being sealed off if the war drags on. However, its central bank has been sanctioned, several banks have been cut off from the SWIFT transaction system, and further restrictions on new debt and equity are being imposed. Looking forward, oil’s price trajectory will depend at least in part upon how effective sanctions on Russia prove to be in shortening the conflict. In addition, the inability of some OPEC+ members to boost production despite increased demand further contributed to tight markets. 24, throughout the month oil prices were reacting to the rising geopolitical tensions. Although the invasion of Ukraine did not officially begin until Feb. The monthly average US-dollar (USD) price of West Texas Intermediate (WTI) crude oil pushed higher (by $8.42 or +10.1%) to $97.13 per barrel in late February. And worries over global energy markets and future trade flows are now exacerbating the issue. all affect the cost of producing forest products.Īs we noted last month, these costs in combination with pinched trucking capacity have driven freight prices for mill deliveries higher in the Northeast. However, the cost of producing logs and fiber is not independent of fuel price, or the price of any other input that goes into generating these products steel, labor, tires, oil, etc. Historically, the supply and demand of logs and wood fiber is ultimately what drives the price of these products on the market, which is independent of fuel price. And while the answer is “ no” under normal circumstances, we’re now dealing with a confluence of economic and geopolitical conditions that are anything but normal.
![lumber prices skyrocket lumber prices skyrocket](https://s.yimg.com/ny/api/res/1.2/FrwjkzTkiQU7QJ2CgqyoSg--/YXBwaWQ9aGlnaGxhbmRlcjt3PTEyMDA7aD02NzU-/https://s.yimg.com/hd/cp-video-transcode/prod/2021-05/03/60907522d6bc1960dfc9dc9a/60907522d6bc1960dfc9dc9b_o_U_v2.jpg)
We addressed this common question last year as oil prices began trending up in late 3Q2021.