November 28, 2016
The week before Thanksgiving turned out to be a great sales week for Freres Lumber Company. Wood products prices had been in a downward spiral for 6-7 weeks and were sitting at yearly lows, so it wasn’t surprising that some bottoming action occurred. Many buyers had been sitting on their hands for the past few weeks, buying only the bare necessities. As a bottom formed in midweek trading, many buyers bought their immediate needs but probably not much more than that. The cash market was able to do a U-turn and firm up, although only modestly. Order files are in the 2-3 week period and mills still have a few weeks to take care of in December.
Scheduled Maintenance to Come
With some of our projects in the mill, we will experience some loss of production from 12/9/16 to 1/9/17. Add to that our normal Holiday shutdown / maintenance week from 12/23/16 to 1/2/17, and it takes a decent amount of wood products off the market for the short term.
Markets Changing with the Weather
Over the weekend the first widespread winter weather hit the northern parts of the country, dumping good snowfall in many areas of the Midwest and Northeast. Weather always plays a big part in the fortunes of the wood products markets, so it will be interesting, as usual. Generally speaking, most people expect modest growth in business for 2017 and there is guarded optimism about business prospects with the new Administration as well.
Factoring in Winter
So, we are off the bottom for the time being and hope we can sustain it into the New Year. The business is there, we believe, but will weather cooperate in the next 90 days? Always the big question as we embark on our winter trading period.