Impact on Your Procurement Strategy

StatCan’s latest report confirms a significant contraction in Canadian sawmill activity, with production falling 7.7% and shipments diving 13.3% in November. While this data carries a nine-week lag, it provides the fundamental 'why' behind the continued upward pressure we are seeing in the current spot market. For procurement managers, this isn't just a look in the rearview mirror; it’s a confirmation that the supply floor was pulled back significantly heading into the new year, creating the thin inventory environment that is currently driving bullish momentum across the Framing Lumber Composite.

The drop to 3.67 million m3 in production and the even steeper decline in shipments ( 13.9% year-over-year) indicate that Canadian producers were aggressively curtailing output to prevent inventory builds during a period of uncertain demand. This supply-side discipline has now collided with a seasonal uptick in buying, resulting in the accelerating rally we’ve tracked over the last three weeks. Even though the price momentum is showing signs of decelerating from its recent peak, the technical signals remain firmly in the overbought territory with an RSI of 70, suggesting that buyers who waited for a 'dip' are now chasing a moving target.

Geographically, this impact is most acute for distributors reliant on Western SPF and Canadian-sourced framing stock. With shipments down 13.9% annually, the pipeline of wood moving into the US is significantly narrower than this time last year. Our ML forecast suggests a further 2.8% price increase by February 6, supported by a high-volatility regime of 16.1%. While the macro data from StatCan is stale, the price action it precipitated is very much alive. We are currently in a high-volatility environment where waiting even 48 hours to pull the trigger on a rail car can result in a four-figure cost increase per unit for a standard distributor order.

Looking forward, the combination of reduced Canadian output and consistent US demand signals creates a high-risk environment for short-covered buyers. Institutional memory shows a 100% bullish stance over the last two weeks, and nothing in the current production data suggests a reason to pivot. Procurement strategies should focus on securing February and early March volume now. The risk of being under-inventoried during a supply-constrained rally far outweighs the potential savings of a minor technical correction that has yet to materialize. Distributors should expect lead times to remain extended and mill order files to stay pushed out into late February as producers maintain their disciplined stance.

Key Takeaways

• Canadian supply floor is firming; November production cuts of 7.7% are now manifesting as tighter spot availability in the current market.

• High volatility of 16.1% suggests rapid price swings; prioritize volume security over 'perfect' price timing to avoid being short-covered.

• The 7-day forecast predicts a 2.8% price hike; lock in remaining February framing requirements before the Feb 6 target date.

Market Outlook

Pricing Trend: UP

Confidence Level: MEDIUM

Recommended Action: Lock in February framing lumber needs before the Feb 6 target date to avoid the predicted 2.8% price increase driven by Canadian supply tightening.

How LumberFlow Helps

Use the weekly price forecast to monitor if the current accelerating rally begins to plateau. Within LumberFlow, the agentic sentiment nudge flags these supply contractions at the quoting stage so you can justify higher bids to your sales team.

Ready to stay ahead of market trends? Book a consultation with our team to see how LumberFlow's procurement platform transforms dimensional lumber buying.