Tag Archives: Lumber Prices

PRAGCAP: Lumber Futures Could be Pointing to Improved Residential Construction

Lumber Futures Could be Pointing to Improved Residential Construction

By Walter Kurtz, Sober Look

Lumber futures turned out to be a good predictor of US housing starts. The large decline earlier this year (see post) translated into weaker than expected residential construction in June (see post). That means we should certainly pay close attention to lumber as a leading indicator. And July is showing a steady increase in prices, potentially pointing to improving demand (see figure 1).

After a disappointing result in June, is construction picking up this month ? Many economists think so. The key data that researchers point to is the Homebuilders’ survey, which is at the highest levels since 2006 (see figure 2).

The index had certainly diverged from housing starts in the past, but the combination of this survey and higher lumber prices may be pointing to an improvement in residential construction for July. The US economy could certainly use it.

Lumber futures

(Figure 1)

Homebuilder survey

(Figure 2 – Source: DB)

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CR: Lumber Prices off 25% from recent peak

Lumber Prices off 25% from recent peak

by Bill McBride on 7/07/2013 

Just two months ago I mentioned that lumber prices were nearing the housing bubble highs. Since then prices have declined sharply, with prices off about 25% from the highs in early May.

Some of the decline could be related to additional supply coming on the market, and some due to less buying from China (several sources are reporting that China has pulled back significantly on buying North American lumber).

On additional supply, a few months ago the WSJ had an article about some producers increasing supply:

Georgia-Pacific, the largest U.S. producer of plywood … plans to invest about $400 million over the next three years to boost softwood plywood and lumber capacity by 20%.

Lumcber PricesClick on graph for larger image in graph gallery.

This graph shows two measures of lumber prices (not plywood): 1) Framing Lumber from Random Lengths through last week (via NAHB), and 2) CME framing futures.

Lumber prices are now about 25% off the recent highs.

Read more at http://www.calculatedriskblog.com/2013/07/lumber-prices-off-25-from-recent-peak.html#6cFiluGhPTIo9Fcv.99

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CR: Lumber Prices decline Sharply over last month

Lumber Prices decline Sharply over last month

by Bill McBride on 5/20/2013  

Just over a month ago I mentioned that lumber prices were nearing the housing bubble highs. Since then prices have declined sharply, with prices off about 20% from the recent highs.

Some of the decline could be related to additional supply coming on the market, and some due to less buying from China (several sources are reporting that China has pulled back significantly on buying North American lumber).

On additional supply, two months ago the WSJ had an article about some producers increasing supply:

Georgia-Pacific, the largest U.S. producer of plywood … plans to invest about $400 million over the next three years to boost softwood plywood and lumber capacity by 20%.

Lumcber PricesClick on graph for larger image in graph gallery.

This graph shows two measures of lumber prices (not plywood): 1) Framing Lumber from Random Lengths through last week (via NAHB), and 2) CME framing futures.

Lumber prices are now 20% off the recent highs.

Read more at http://www.calculatedriskblog.com/2013/05/lumber-prices-decline-sharply-over-last.html#UyI6GKlagaM8APOV.99

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CR: Lumber Prices near Housing Bubble High

Lumber Prices near Housing Bubble High

by Bill McBride on 4/09/2013  

Demand for lumber is increasing, but demand is still far below the levels during the housing bubble. However supply is lower than during the bubble years too. There are several factors impacting supply including a large number of sawmills still idled (it takes time to restart), the impact of the Mountain pine beetle, reduced maximum cuts in parts of Canada, and the permanent closure of high cost mills.

Note: Here is a great series on the mountain pine beetle from the Vancouver Sun: Pine Beetle

The B.C. government estimates that of the 2.3-billion cubic metres of merchantable lodgepole pine in the province, the beetles have claimed 726-million cubic metres over at least 17.5-million hectares.

Last month the WSJ had an article about some producers increasing supply:

Georgia-Pacific, the largest U.S. producer of plywood … plans to invest about $400 million over the next three years to boost softwood plywood and lumber capacity by 20%.

Much more capacity is needed.

Lumcber PricesClick on graph for larger image in graph gallery.

This graph shows two measures of lumber prices (not plywood): 1) Framing Lumber from Random Lengths through last week (via NAHB), and 2) CME framing futures.

Lumber prices are now near the housing bubble highs.

Read more at http://www.calculatedriskblog.com/2013/04/lumber-prices-near-housing-bubble-high.html#ztQdV2FMO5DDTqOQ.99

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CR: Lumber Prices up Sharply, Suppliers Scramble to Keep Up

Lumber Prices up Sharply, Suppliers Scramble to Keep Up

by Bill McBride on 3/21/2013 

From the WSJ: Amid Housing Recovery, Humble Plywood Shines Anew

Growing demand and tight supplies have pushed up plywood prices by 45% in the past year, and U.S. producers are scrambling to get back up to speed after slashing output of the basic construction material during the housing bust.

Georgia-Pacific, the largest U.S. producer of plywood, will announce Friday it plans to invest about $400 million over the next three years to boost softwood plywood and lumber capacity by 20%.

With demand rising, the composite price for structural panels, which includes plywood and other wood products, jumped to $511 per thousand square feet on March 15 this year, up 45% from $351 in mid-March a year ago, according to Random Lengths, a Eugene, Ore., wood-products market reporting service.

Lumcber PricesClick on graph for larger image in graph gallery.

This graph shows two measures of lumber prices (not plywood): 1) Framing Lumber from Random Lengths through last week (via NAHB), and 2) CME framing futures.

Lumber prices are now at 2004 and 2005 levels.  Demand is far below the levels during the housing bubble, but supply has fallen sharply too.

Read more at http://www.calculatedriskblog.com/2013/03/lumber-prices-up-sharply-suppliers.html#by52g5HXfx0IO3fT.99

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Framing lumber prices hit an 8-year high last week as the US housing and construction sectors rebound

Framing lumber prices hit an 8-year high last week as the US housing and construction sectors rebound.

lumberA rebound in the US housing market, rising housing starts, and increased foreign demand brought framing lumber prices to an eight-year high last week of $423 per 1,000 board feet. That’s the highest price for the lumber used in the construction industry for framing new homes since the first week of March in 2005 (see blue line in chart). Framing lumber prices last week were 42.4% higher than a year ago, following year-over-year gains of more than 40% in each of the three previous weeks.

Prices for lumber futures contracts sold on the Chicago Mercantile Exchange (CME) rose by almost $5 per 1,000 board feet last week to $395, from $380.30 the previous week. Except for a slightly higher price of $390.50 in mid-February, lumber futures prices are at their highest level since the last week of March in 2005 (see red line in chart).

MP: The rebound in lumber prices last week to an eight-year high is more evidence that a robust recovery is underway in the US housing and construction markets.

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CR: A Brief Comment on Lumber Prices

A Brief Comment on Lumber Prices

by Bill McBride on 2/22/2013 

Joseph Cotterill at the FT Alphaville blog linked to a post on lumber prices last night: Listen to Lumber. The post included a graph on lumber prices over the last few months, and showed a fairly sharp decline in future prices recently. The author wrote:

Over the past few years, the strength in lumber proved to be a leading indicator for the bullish action we had seen in the homebuilders and, frankly, all housing related stocks.

This week, though, lumber has sold “limit down” …

I have no comment on housing stocks, but I suspect this decline is either just “noise” following a large price increase, or more supply coming back on the market (remember many mills closed during the housing bust, and I suspect some are coming back online). Back in 2010, after the end of the housing tax credit, I noted that lumber prices collapsed. But the dynamics were different (that was obviously tax credit related and not a real recovery).

Lumcber PricesClick on graph for larger image in graph gallery.

This graph puts the recent decline in context. This graph shows two measures of lumber prices: 1) from Random Lengths through last week (via NAHB), and 2) CME futures (through today).

The recent decline in CME futures hardly shows up.

Read more at http://www.calculatedriskblog.com/2013/02/a-brief-comment-on-lumber-prices.html#SHol4avYUqQWUOrV.99

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