By SHERRI TAYLOR
Journal News Editor

Rising lumber prices nationally have improved sales for Piney Woods region wood products manufacturers, and loggers should enjoy stronger markets also, at least for the short term, say local industry spokespeople, but no one is ready to declare a final victory over the the long timber slump.

According to national media reports, lumber prices have gone through the proverbial roof in the last few weeks with no end in sight. Tight wood supplies and surging home building have triggered the steep rise in price. While the ascending lumber and plywood panel prices will add to the cost of new homes, it is not expected to slow growth by much.

According to the Wall Street Journal, prices for framing lumber jumped 17% from $327 per thousand in December of 2003 to $384 per thousand board feet in January of 2004. Prices are expected to continue their increase, crashing through the five year peak of $386 reached in September of 2003. Composite prices (an average of 11 key products) for panels shot up 60% to an all time high of $571 per thousand square feet.

"I've seen the price for plywood go up approximately $250 per thousand," said Latnie Brewton IV, of Lumber Express in Winnfield, Louisiana. While those prices tend to make his job as a lumber broker more difficult, he feels the mills should be profiting from the escalating cost of wood products.

"The mills are beginning to benefit from the higher prices," said Jimmy Price of PBS Lumber in Winnfield, Louisiana. "But it's probably a short term phenomenon. The prices will possibly hold for two or three months and then, who knows?"

In addition to the mills seeing advantages, loggers also have seen improvements.

"Anytime prices get higher," explained Art Dawson, managing director of PBS Lumber, "demand for wood grows and a mill's consistency in purchasing grows. Those are things that loggers like about the business." However, he offered a caution to all in the business.

"We sell a commodity. It's sometimes like a roller coaster ride," Dawson said. "Right now things are up but no one knows what's in the future."

When the demand went up, supplies were low in lumber yards. Those traditionally decrease their inventories around the end of the year for two reasons: some states collect a tax on all inventory at year's end, and cold, wet weather usually hinders housing construction, lowering demand. Added into the mix this year was the fact that railroads were running behind schedule.

When housing starts made a stronger than usual showing and demand jumped and the supply wasn't available.

"There's still a significant demand for wide lumber - 2X12, 2X10, and 2X8 - but it's just not out there," said Brewton. Consequently, cost of wide lumber has risen $40 per thousand.

Several other factors play into the rise in prices.

"Imports from Europe and South America are down slightly," explained Mike Dawson of Random Lengths Publications, a market tracking firm in Eugene, Oregon. He said the weaker dollar was pushing that trend.

Traditionally, some mills take downtime during the holidays, cutting production. For the plants that continued production, there were fewer logs coming in because of wet weather in the Southeast. At this time, companies turn to their higher ground property to supply their plants. Mills, feeling the pinch, began to purchase smaller logs. Smaller logs mean smaller dimension lumber is being produced.

The fires in the northwest in 2003 also slowed production of lumber last year. Several mills closed down, forcing higher production levels from fewer mills to support demand. According to the Wall Street Journal, of the 417 sawmills in the Southeast, more than 50 have closed over the last five years, leaving the rest to pick up the pace.

"The turnaround in pricing that began last year is benefiting the mills that were able to survive," reports the Wall Street Journal.

When plywood prices jumped during the fall of 2003, the sale of plywood to Iraq for rebuilding purposes was cited as the number one cause. Even then experts pointed to other market indices to support higher prices, debunking the Iraq theory. Circumstances have proven them correct.

"In reality, simple supply and demand factors are at work," said Dawson of Random Lengths, in a telephone interview with The Piney Woods Journal. "Demand rose sharply and supplies failed to keep pace."

Random Lengths listed the reasons for the high prices as the strongest housing market since the late 1970s, record level rebuilding and remodeling projects, first-quarter inventory replacement, relatively flat production levels, and the closure of important mills.

Reports show single-family home building set a record in 2003 at 1.498 million new homes started. This robust housing market is forecast to continue as long as interest rates don't rise.

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