Lower mill production and inventory protection were evident in many regions from Canada to the Southern U.S. as log costs, shipping and resourcing issues continue to challenge the overall supply chain. Buyer frustration was nearly panic-like at some levels as spot shortages and unusual order file delays hit mills that typically only sell at prompt. Options to export wood from North America were also hampered by massive port constrictions leading some exporters to pull back production rather than facing costly unshippable loaded containers or no containers at all.
The demand side of the equation continues to impress, adding further support to a rare fourth-quarter bullish run in the lumber industry. Both consuming segments, DIY to home builders, are making little headway with project backlogs, burdened by the same logistical and resourcing challenges seen in supply. Home center business is still booming on DIY, evidenced by some mills netting the highest home center invoicing October on record. On the building side reports show the number of U.S. homes under construction, but not yet completed, rose to the highest since 1974. With demand not under any pressure to wind down, even as the calendar flips to November, we expect the direction for prices to become highly mixed as demand seasonally wanes for some items but remain strong for others.
