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December 23, 2021
The Federal Reserve Bank of St. Louis tracks commodity prices and publishes Producer Price Indexes (PPI) on their FRED (Federal Reserve Economic Data) website. Among the commodities they track are softwood lumber and hardwood lumber – two inputs that are critical to companies engaged in homebuilding and remodeling, and the manufacture of home furnishings.
Softwood lumber is the primary wood used in the construction trade. Hardwood lumber is used principally in the making of such items as flooring, countertops, cabinetry and furniture. According to FRED, the November, 2021 prices of both softwood and hardwood lumber are up just under 50 percent compared to the start of the Covid-19 pandemic (i.e., April, 2020). However, price changes for these two commodities followed very different trajectories. Whereas the softwood price chart resembles a roller coaster, hardwood prices have followed a long, steady upward climb.
In May of 2021, softwood lumber prices peaked – up 174 percent compared to April, 2020. Between May and September, softwood prices declined dramatically, bringing softwood prices only 29 percent higher than at the time of the Covid-19 outbreak. Recent rises since then pushed softwood prices 46 above pre-pandemic levels, as of November.
In contrast, hardwood lumber prices never spiked dramatically; nor have they experienced any marked month-over-month decline. At their height in October, hardwood prices were 48 percent higher than in April 2020. As of November, they are up 47 percent compared to pre-pandemic levels.
The prolonged, steady climb in hardwood prices, coupled with increases in other manufacturing input costs, are compressing profit margins of manufacturers of butcher block (hardwood) countertops and kitchen islands, tables, carts and cutting boards.
John Boos & Co., based in Illinois, recently announced it will increase wood-product prices by 5 percent effective January 1, 2022. In a letter to the company’s dealer network, National Sales Manager Steve Pless explained, “Challenges associated with the supply chain continue to be a nuisance and the cost of raw materials, labor and transportation are still rising.”
Another manufacturer of hardwood islands, carts and cutting boards, Catskill Craftsmen, based in New York state, last week announced it will raise prices 20 percent in the year ahead. Whereas Boos & Co. implemented a series of price changes throughout 2021, this marks Catskill’s first increase since 2019. In an email to resellers, Catskill’s Ken Smith shared, “We receive material from several mills and each one is operating at half capacity due to lack of hardwood logs.”
This industry news update is presented by the Butcher Block Co. - an Ecommerce store specializing in hardwood products, such as butcher block countertops and island tops, and butcher block tables, carts and cutting boards.
For more information, please visit Butcher Block Co.
Contact Info:
Name: Kathleen Grodsky
Organization: Butcher Block Co.
Address: 10448 N 21st Pl Phoenix, Arizona 85028
Phone: (877) 845-5597