26 WESTERN PALLET
Bouchard said that he did not expect a WTO decision about Canadian softwood lumber until fall at the earliest, and then appeals process would follow. "Don't expect anything this year," said. He also noted leaner inventories. "It's a lean pipeline, so prices can react quickly," he said. "And the wild card is China. It could be another year of erratic pricing."
For his part, Tod Kintz sees the softwood lumber market running more smoothly this year. He viewed 2018 as a unique year. For 2019, he noted, "Availability seems to be more normalized, transportation more normalized, so there may be less volatility. "
"We hadn’t seen a market go up as fast, and go down as fast," said Rod Lucas about the 2018 softwood market. With rising prices, a world market was created. Material surged from Europe, as well as from Chile and other countries. "We even heard there was pallet stock coming in from South Africa. When the market got good it created a world market. I think we are going to see things stabilize this year."
Mark Mitchell agreed that 2018 was a perfect storm with rail car shortages, and delays. "Everything hit at the same time," he said. "Inventories are really skinny out there, so I don’t see why lumber prices shouldn’t go up. Normally we have a spring seasonal buy, and that seems to be what’s going on."
Advice for Pallet Companies
In terms of advise to pallet companies, DeLacy emphasized the importance of educating customers on macro trends to help them better understand how pricing works. He stressed that low grade pricing is tied closely to home production. "If home production is steady, you are going to have a steady high grade market, and you will have the low grade residuals." He recommended that lumber and pallet buyers pay attention to housing trends and interest rates. He also encouraged lumber buyers to stay engaged with their suppliers.
Bouchard suggested that in other countries, one way that companies reduce volatility is through buying by the quarter with 60 days lead time. It is a way, he said, for both pallet manufacturers and their customers to enjoy more stable pricing.
For his part, Mitchell encouraged pallet makers to not get caught up in trying to outguess the lumber market. "Don’t speculate," he cautioned. "Just buy what you need, when you need it."