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North American Lumber Prices on a Runaway as Supply Remains Tight
North American lumber demand continues to be strong even as customers digest the rush of wood that was ordered over three weeks ago. Actual support for lumber prices is definitely coming from the cash market, where under-stocked customers keep coming back to suppliers for additional wood supplies, which they need immediately for building projects.
At this time of year, lumber demand is usually ramping up for the coming building season, and suppliers are accustomed to booking large orders. However, no lag—or sales downtime—occurred at the end of 2017. In addition, sawmills in British Columbia are still waiting for the latest accurate inventory data from the Ministry of Forests following the catastrophic wildfires from last summer.
Ongoing supply constraints—as well as transportation woes due to severe weather in many parts of the US—have been challenging. A genuine lack of availability of certain products has caused consternation with buyers as sawmills have done their best to locate appropriate logs and schedule the manufacture. Order files have grown longer accordingly.
Confusion has reigned among customers as operators have worked hard just to get logs in and lumber out. Having visited sawmills and distributors looking to fill inventory holes, customers have been met by either sustained high prices or even price increases. Prices on specialty items and sizes have already increased by more than standard items; this week those leapt up by alarming ratios as supply was simply not available and sawmills were not confidently able to quote a date for production.
In general, the market situation that most producers experienced during 2017 continues into 2018: Any new lumber produced at sawmills continues to be sold before it is even finished being processed.
Courtesy of Keta Kosman, Forest2Market
The only thing necessary for the triumph of evil is for good men to do nothing.
Edmund Burke
Concern surrounds mainly the stain related to fungal activity. This sort of stain can be a common occurence during warmer weather caused by certain dark-colored microscopic fungi creating a discoloration that develops in the sapwood of the tree. Conditions that promote fungal activity are:
The color of stain ranges from black or grey to red or orange. In pine, blue stain does not affect the strength or performance of structural lumber and therefore the grade is not affected either.
In any of these situations, stain poses no threat to forest stands and is therefore not covered under ISPM 15.
One caveat to this is that Australia regards blue stain fungi as associated with beetles covered under ISPM 15. Care should be taken when using WPM to ship there.
Mold is a type of fungi that lives off the sugars in the wood. It develops on the wood surface mainly as a result of airborne spores after the wood has been cut.
For mold to develop, the conditions must be right and include:
Mold will manifest on the wood surface as a fuzzy or powdery substance with colors ranging from light pink to black. While this surface material is generally easy to brush off, residual stain may remain in the wood fiber. The conditions that allow mold to grow can also lead to decay if not addressed.
Regardless of the circumstances, mold itself does not pose a risk to forest stands and is not covered under ISPM 15.
In order to mitigate mold development in lumber, mills may apply an anti-fungal chemical to the lumber in order to poison the thin outer layer to eliminate the risk of any new fungal stain or mold. This is only a temporary fix as most chemicals lose their effectiveness after about 3 weeks.
The best way to control mold is to eliminate one of the four conditions that allow it to develop. This is typically addressed on the moisture side. Kiln drying wood (dried to a moisture content of 19% or less) and keeping it dry is the most effective way to prevent mold growth. The kiln drying process is typically done at a rate that initially prevents mold development. For the ISPM 15 standard, lumber must also be heat treated and lumber that is both kiln dried and heat treated will be designated on the grade mark as "KDHT". Once a facility receives KDHT lumber it should be properly stored to avoid being re-exposed to moisture which could allow mold to grow. Pallets built from KDHT lumber require the same care as the lumber to avoid mold issues from developing.
While mold and stain are not restricted by ISPM 15, many customers frown on these being on their WPM. However, using the proper preventive measures at a facility can greatly reduce the development of these two potentially problematic issues.