An analyst for Farm Credit Canada says the recent spike in lumber prices may become permanent.
“Although lumber prices are expected to return to normal…it wouldn't be surprising to see upward pressure on construction costs continue for some time,” said senior FCC appraiser Eric Lemaire.
Between June and September lumber prices doubled with eastern spruce 2x4s selling at $1,270 per thousand board feet, compared with the 52 week average of $649.
The lumber futures market hit $1,000 US$ per thousand board feet in September, up from $457 in March.
Pressure from pandemic sales, strong U.S. demand, forced curtailment of Canadian lumber mills and labour scarcity all play a role in the price increases, said Lemaire.
As a consequence, a new broiler barn could cost 30 per cent more with five to 10 per cent tacked onto a new hog feeder barn.
Lemaire suggests three options for farmers planning to build structures: get a bid process going, delay the project, and consider other building material options.
And he suggests adding a 10 per cent to 20 per cent contingency to the building budget.
The increase in lumber prices isn’t expected to affect the building’s value unless the increase sticks for a long time.
Ron Walter can be reached at email@example.com