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Market Recap: RISI Crow’s Construction Materials Cost Index

BY HBSDEALER Staff

A price index of lumber and panels used in actual construction for May 3, 2013

*Western – regional species perimeter foundation; Southern – regional species slab construction.

Crow’s Market Recap — A condensed recap of the market conditions for the major North American softwood lumber and panel products as reported in Crow’s Weekly Market Report.

Lumber: Trading chugged along at a modest pace, leaving SPF lumber again susceptible to deteriorating prices. Buyers noted that some mills appeared to have cleaned up their lists from sales the prior week while others continued to look for orders more aggressively. Limited participation from buyers in the Southern Pine lumber market left prices weak once again. Buyers tended to fill only their most pressing needs with volumes available for quick shipment. Demand remained too light to slow the downward momentum found in Coastal species lumber pricing. Buyers had the ability to stand firmly on the sidelines while producers and secondaries with unsold positions competed for sales at lower price levels. Inland producers saw little enough action to reduce their tendencies to discount, leaving most of the heavy competition to distributors and wholesalers who had wood to move. Radiata Pine is available in both 5/4 and 6/4 Mldg&Btr and Shop, although Shop prices are unchanged this week. Mldg&Btr and Shop activity has moderated over the last few weeks, especially in Ponderosa Pine, with most producers processing the species in a seasonal change. Mill level action for Ponderosa Pine 4/4 boards is being distorted by seasonal increases in Ponderosa Pine production. Eastern White Pine producers report that they sense a "general market weakness," but most are still moving the volumes they need in order to keep reasonable mill order files. Idaho White Pine sales have been sporadic and focused on highly mixed truckloads. More evidence that a number of distribution yards carried ample volumes of Western Red Cedar appeared. Weather remained a barrier to consumption in the Rocky Mountain States and upper Midwest. Rains in the South limited consumption further.

Panels: Late in the week, volume purchases of OSB put an immediate brake on price declines, and a little positive attitude began to flow into the OSB market. Enough chaos was gone to give mills fortitude to stop deep discounting and even to move their numbers up a bit in some cases. Producers and secondaries reported slow trading in the Southern Pine plywood market, leading to price cuts. Trying to maintain some cushion, producers discounted to push order files into the weeks of May 13 and 20. A lack of demand for Western Fir plywood continued to infuse weakness into the market. Buyers continued to hold out, sensing more downside risk still left in prices. In Canadian plywood, producers reported varying degrees of discounting for most of the week. Buyers were able to get loads at prices ranging from one to five points off accepted lists. Particleboard buyers in the Southeast continued to look west for supplies, finding it difficult to locate all of their needs in the Southeast. MDF sales remained steady.

For more on RISI, click here.

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Challenged by weather, Scotts sales slip

BY Ken Clark

Marysville, Ohio-based Scotts Miracle-Gro posted net sales of $1.02 billion in the second quarter ended March 30, down 13% from $1.17 billion a year ago. 

Net income of $100.0 million declined from $127.2 million in the prior-year quarter.

The year-over-year decline primarily was attributable to a significant delay in the start of the lawn and garden season in nearly all North American and European markets due to a colder than normal March, the company said. 

“Although the weather presented obvious challenges in March, the resilience of the lawn and garden category and the strength of our brands became evident as soon as the season broke at the beginning of April," said Jim Hagedorn, chairman and CEO. "Consumer purchases of our products in the U.S., which were down more than 25% on a fiscal year-to-date basis entering April, are down 9% through May 5 after five consecutive weeks of strong year-over-year growth.”

Scotts LawnService sales declined 8% to $32.9 million in the second quarter, compared with $35.9 million during the same quarter a year ago.

Hagedorn said consumer purchases for the first five weeks of the third quarter are up 19%.

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Pending home sales improved in March

BY HBSDealer Staff

The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 1.5% to 105.7 in March from a downwardly revised 104.1 in February, and is 7% above March 2012 when it was 98.8, according to the National Association of Realtors. Pending sales have been above year-ago levels for the past 23 months; the data reflect contracts but not closings.

"Contract activity has been in a narrow range in recent months, not from a pause in demand but because of limited supply," said Lawrence Yun, NAR chief economist. "Little movement is expected in near-term sales closings, but they should edge up modestly as the year progresses," he said. "Job additions and rising household wealth will continue to support housing demand."

The PHSI in the Northeast was unchanged at 82.8 in March and is 6.3% higher than March 2012. In the Midwest the index increased 0.3% to 103.8 in March and is 13.7% above a year ago. Pending home sales in the South rose 2.7% to an index of 120.0 in March and are 10.4% higher than March 2012. In the West the index increased 1.5% in March to 102.9 but is 4.3% below a year ago.

Total existing-home sales are projected to increase 6.5% to 7% over 2012 to nearly 5 million sales this year, while the national median existing-home price is forecast to rise about 7.5%.

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