Market Update: Exchange Rates

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John-Colley-Final-1024x1024Exchange Rates

In July of 2014 the exchange rates between the United States and Canada started to slip.  It moved from parity to $1 USD vs. more than $1.30 CAD.  This indicates for every dollar the Canadian lumber producer’s ship into the United States they receive more than $1.30 back.

The exchange rates between China and Russia came into play as well.  China’s economy is slowing… Their stock market crashed hard but it also isn’t representative to the population so you have to take that with a grain of salt.  The lumber they consume is also typically lower grades as well but it is still mill production.

It is easiest to look at it in China’s perspective the same way we look at US consumption from the US perspective.  Currently, for every dollar China spends on Canadian lumber they get $.21 worth of product.  For every dollar China spends on Russian lumber they get $9.87 worth of product.  Clearly they currently are getting better value buying from Russia if they can deal with all the reported logistics issues.

The market proved in economic terms “inefficient” meaning it didn’t correct very fast.  The slide in commodity pricing really didn’t take place until the first quarter of 2015.  Technically it was the largest first quarter price drop recorded in Random Length’s history.

The following graph depicts the futures pricing.  It shows what happened after we established most pricing in April.  Essentially we rode the lumber market up and subsequently back down to about the same point with little impact on customer pricing.

lumber chart 1


The Softwood Lumber Agreement

The slide on pricing in the first quarter triggered the Softwood Lumber Agreement (SLA) trade restrictions which placed a tariff on the Canadian Exports.  Essentially the tariffs were largely responsible for the bump in pricing that peaked towards the end of June.  They were also responsible for the bump that started in October.  The SLA expired this fall.  There have been rumors it may be re-instated but as of now nothing has materialized.  Contributing to the debate is the fact that Northern mills such as West Fraser, Canfor, and Weyerhaeuser all are acquiring Southern Yellow Pine mills in a process known as “consolidation.”  Essentially this means they are “playing both sides of the fence” and aren’t as interested in a tariff any longer.


One more issue on the lumber side that really hasn’t received much attention yet is how the lumber futures are traded on the Chicago Mercantile Exchange (CME).  The CME moved to an all-electronic format and closed the pit trading this summer which has reportedly changed the “feel” of how the futures trade.  There are also talks of eliminating after hours trading as well.

The dynamics haven’t really been evaluated critically yet but watching the futures trade it appears any industry news tends to create a lot of “panic” transactions which move the market rapidly.  Investment funds that have to maintain a specific percentage of their portfolio in lumber also tend to move the market substantially.  At this point I’m not expecting any real changes.


            Freight continues to be one of those intangibles and doesn’t seem to go down.  Fuel costs are currently low, but increased regulations on trucking in the United States and the draw of more lucrative contracts keeps many truckers from wanting to delivering lumber.  Canadian mills have reported higher freight rates and shortages of trucks almost all year and tend to blame the shortage on lack of drivers that want to cross the border into the United States. Other times truckers shift their services to hauling for other industries  such as produce and currently I’m hearing “Christmas trees.”  Regardless of the reasons, it is apparent the trucking industry is going to go where they get the most lucrative returns.

Wood Markets Monthly

“Wood Markets Monthly International Report” is a publication that provides information on sawmill global results, sawmill global earnings, the global cost of logs, the global sawmill costs, lumber revenues, and the U.S. Markets Competitiveness.  In their October edition they suggest competitive pricing as a result of Exchange rates and currency valuations for wood coming from Canada and southern US mills.  Western U.S. mills will suffer from a lack of substitutable products (they can’t import cheap logs or mill material any cheaper than a Canadian mill).  Overall though, they suggest “Lower lumber prices are expected in 2016” and suggest prices may “fail to see the levels of 2013 and 2014 until demand moves to much higher levels – perhaps 2017”.

With all this being said, a Look back at the futures chart shows we have already came back up above the annual lows (where we set pricing last year).  At $220/m mills curtailed production and drove the market back up.  My own personal feelings are that dimensional pricing levels are going to go too far one way or the other than the level they are now.  There may be a few opportunities before spring yet but by March and April at these levels it is definitely a safer bet to expect a seasonal bump.

Panel Summary

The panel market is a different story.  Panel manufacturers really have ample production capacity if they chose to use it… pricing remained relatively low for most of 2015 until mills curtailed production.

Panel pricing is a function of many of the same criteria as lumber pricing; log costs, production costs, freight costs, exchange rates, and etc.  The current spike is a reminder that when panel pricing is too low, any disruption in production will result in an increase in costs.

Freight issues to this point have prohibited bringing in material from different geographic regions.  From the current exchange rate perspective production from Canada should be economical in the U.S. but the fact that the one clear substitute for Weyerhaeuser, the G.P. Englehart mill, took an extended curtailment made it a mute issue in our market.

As pricing bumps up slightly it will open up supply from other zones, currently manufacturers want to ship wood at market price but we are approaching the levels where North Central producers will hurt themselves going much higher.  Overall OSB pricing was too low and freight was really problematic to get OSB from outside North Central.  Crossing the border from Canada to the US again continues to be problematic.

lumber chart 2

With all this being said, G.P. announced they are starting to have wood available in December.  This would suggest pricing will remain firm well into the first quarter but rise has appeared to have halted.  With March and April needs right beyond that I wouldn’t look for the bottom to drop out of the OSB market right away and I would expect pricing around these levels.


Total Cost of Ownership

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There are many products in our industry over the years that are worthwhile considering the total cost of ownership. Too often, we put too much weight on the transactional cost, not the total cost. The total cost of ownership includes purchase cost, maintenance, resell or disposal, over the life of the product.  An example of this would be comparing a 10-15 year wood deck (including the maintenance), to a 25 year composite deck. Every 2-4 years a wood deck requires re-staining/sealing accruing the costs of material, labor and storage or disposal of the added paints and stains.
Another example is comparing PVC trim to wood trim.  Every study that I have seen on this supports paying a higher transactional cost for the premium product (unless the homeowner enjoys the weekend maintenance chores).  Using Dow foam, or Zip-R panel on your building envelope increases cost initially but saves energy bills, and also decreases the total cost of ownership. Using LSL studs in certain applications, andLSL bottom chords on attic trusses also increases transactional costs but decreases labor for future trades because of the precision for straightness.
Selling the premium product with a total cost of ownership mentality takes education.  One of our core values is career-long learning, and we are continually looking for ways to educate our customers on products and bring choice to the market place. Look for these type of events over the fall / winter months from Zeeland & make sure to save Thursday February 4, 2016 as the date for our Zeeland Partner Summit.
Mike Dykstra
President & CEO
Zeeland Lumber and Supply
office 616.879.1158
mobile 616.836.2907

Lumber Wane

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In recent episode of the ‘At Home Show’ Mark Vanden Bosch sits down with John Colley to discuss lumber and lumber pricing.  In this short video clip, the pair talk about lumber wane and what it means to the end user.

Previous episodes of the ‘At Home Show’ are available for download at

Lumber Pricing August 2014

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John-Colley-Final-1024x1024Last month we talked about the spread in pricing between asking levels and futures purchases.  We said at some point the two would come together because there was a relatively large spread. Cash did come down briefly but when the two met they both started rising together.  The uptick wasn’t much of a seasonal surprise, when this happens mills overproduce certain lengths which they tend to move off at a discount.  Pay attention to odd length’s such as 8’s and 14’s to get a better value on lineal if lengths are not critical.

Studs also continued their slow upward trend with the exception of 2x4x104 5/8″ which have been relatively flat.  116 5/8″ studs are becoming much more common which may be one of the factors contributing to the very high 2x4x10 and 2x6x10 asking levels.  We have plenty of 116 5/8″ studs in stock should you need a precut stud for a 10′ wall.

OSB is up but it is still trading at the bottom of the trading range.  Weyerhaeuser is moving into their planned shutdown so we can expect higher costs with freight factors and lack of production in the North Central region. As of today, plywood is trading at very high levels. I recommend that plywood subfloor users take a look at premium products such as Advantech.  ½” plywood users may even want to consider using thicker square edge OSB. Having put nails in both products, I know it feels better nailing plywood than OSB but these enhanced products are solid and hold up well.  Advantech actually has the best no-sand warranty on the market (500 day no-sand and limited lifetime transferable warranty).  Full warranty details on Advantech can be found here.  Again, this is in stock at Zeeland Lumber & Supply.

Wide dimensional has been flat until the last two weeks.  Pricing isn’t running away but it appears to be grinding upwards.  Look for alternative species with equivalent design values for Hem Fir or Doug Fir should major spreads start to develop.  We inventory 8′ to 16′  #1 Southern Yellow Pine in 2×8, 2×10, and 2×12 should you need anything with higher design values.  They work very well for pole barn carriers and you can sometimes get more length out of them when you need to frame rafters.

From my desk, I think it looks like we are in for the typical fall push.  If you have any projects coming that are particularly heavy in any specific dimension or length please let us know.  We continue to work diligently for you to provide solutions and value.

Trex Railing

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Trex railing offers variety in both style and color.  Whether you are building your dream deck from the ground up or adding railing to an existing deck, there is a railing style to fit your vision.

Traditionally, decking was only available in PVC or treated lumber.  While this worked for many years, homeowners demanded more choices.  This is where Trex railing shines.  Available in three different product lines (Trex Transcend, Trex Reveal, and Trex Select) there is a product that can fit perfectly into the decor of any home. Trex Railing is available in several different colors with different baluster options.

To show the ease of installation, Trex’s Jeff Ruddick partnered with Zeeland Lumber’s Jay Ellsworth in the videos below.  If you have any questions about Zeeland Lumber’s decking products, you can visit any of our showrooms to learn more, or contact us directly to schedule an appointment.

How to Install Trex Railing

Popular Cabinet Colors

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Zeeland Lumber’s cabinet designers recently sat down to discuss popular cabinet colors.  The overwhelming response from the group was that light colors are becoming increasingly popular in modern kitchens.  Whites and Grays are growing in popularity while darker stains seem to be ‘fading away.’

According to Zeeland Cabinet Designer, Tiffany George, homeowners want their kitchen to feel bright and inviting.  That’s why we’re seeing the change in color.  Certain dark cabinet colors will always be popular, but as the kitchen continues to be the focal point of the home, people want their guests to feel invited and invigorated.

Cabinet Lighting

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On a recent episode of the At Home Show Mark sat down with Pam Kars.  Kars is the cabinet manager at Zeeland Lumber and Supply and has been in the building industry for more than 20 years.  The pair discussed a variety of topics, but the highlight of the show was KraftMaid’s new cabinet lighting option.KraftMaid-Cabinet-Lighting-300x95

Cabinet lighting can be installed during new construction or added to an existing kitchen.  Basic tools will be needed for an ‘after market’ installation, but it should be relatively easy for a novice handy man.  Lighting can be added to kitchen islands or be mounted underneath counter tops to add a glow to your kitchen.


Composite Decking

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What is Composite Decking?

Composite decking first entered the decking market in the early to mid 1990’s as an alternative to traditional lumber.  Composite boards are often made up of recycled material like rubber and plastic that has been molded to form a deck board.  While the price of composite material can be higher than traditional decking, composite boards offer several unique advantages:

  • Increased Durability
  • Decreased Maintenance
  • Fade Resistance
  • Increased Color Selection
  • Stain Resistant

Trex Composite Decking

Capped vs. Non-Capped Composite Decking

When purchasing composite decking you may need to decide between a capped and non-capped product.  Both materials are made from recycled materials but a capped product is covered in a thin PVC plastic that has been bonded to the composite material.  A ‘capped’ product may result in increased durability. 

Considering a Change?

If you are considering switching from a treated lumber deck to a composite option contact us today.  Zeeland Lumber and Supply offers design services and installation services.

Folding Outswing Door by Andersen

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Hansen-289x300Folding Outswing Doors are one of the latest innovations from Andersen Windows and Doors.  This innovative product dynamically connects indoor and outdoor living.  It steps in the place of a traditional slider and is ideal for the homeowner looking to add flair to their home.

Folding Outswing Doors Feature:

  • Standard and monumental sizes are available: 4 feet to 48 feet wide and up to 10 feet tall
  • Rich natural wood interior; choose from
    pine, oak, maple, cherry, alder, mahogany or vertical grain douglas fir
  • 11 standard exterior colors plus custom colors available; AAMA 2605 is standard
  • 3 sill options: standard, low profile or flush with floor

Zeeland Lumber and Supply is a proud supplier of the full line of Andersen products. From Silverline to Andersen 100 and 200 to Andersen 400 and the A&E Series we have all the bases covered.


Andersen Windows

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Hansen-289x300Our Mission is “Building trust in our industry through knowledgeable service, innovative solutions and exceptional value.”   One of the ways we do this is by partnering with leading brands in the building industry.   Andersen windows and doors is one of those leading brands.   Offering a solution for every specific need in the marketplace, Andersen is a great choice when remodeling or building a new home.   The Andersen Enterprise includes: Silverline vinyl windows, 100 and 200 series, A and E series as well as their flagship product, the Andersen 400 series.  A focus on the flagship 400 series shows a product line that has 6 exterior colors, ranging from white to dark bronze.  Its vinyl clad, ‘Perma-Shield’ exterior never needs to be painted and will perform well in the Midwest climate we live in.  The window’s interior is available pre-finisAndersen-400-Series-300x217hed in white or clear pine.

The 400 series product is available in a wide range of styles, shapes and sizes.  The Andersen 400 Series is about craftsmanship, design and performance.   While partnering with Andersen, we offer a full-time team of window sales and service professionals who can provide you with the resources you need for any size project.   For more information on Andersen and the window and door team at Zeeland Lumber contact us at 888-772-2119.