{"id":12572,"date":"2022-12-08T17:00:53","date_gmt":"2022-12-08T22:00:53","guid":{"rendered":"https:\/\/tempo2.solutionorange.com\/uptimo\/?p=12572"},"modified":"2023-04-22T09:45:53","modified_gmt":"2023-04-22T13:45:53","slug":"lumber-rally-falters-but-higher-prices-expected-to-be-new-norm","status":"publish","type":"post","link":"https:\/\/www.uptimo.ca\/en\/lumber-rally-falters-but-higher-prices-expected-to-be-new-norm\/","title":{"rendered":"Lumber rally falters but higher prices expected to be new norm"},"content":{"rendered":"[vc_row type=”full_width_background” full_screen_row_position=”middle” column_margin=”default” equal_height=”yes” content_placement=”middle” column_direction=”default” column_direction_tablet=”default” column_direction_phone=”default” scene_position=”center” top_padding=”2%” constrain_group_1=”yes” bottom_padding=”2%” text_color=”dark” text_align=”left” row_border_radius=”none” row_border_radius_applies=”bg” overflow=”visible” color_overlay=”#ffffff” overlay_strength=”0.3″ gradient_direction=”left_to_right” shape_divider_position=”bottom” bg_image_animation=”none” parallax_bg=”true” parallax_bg_speed=”medium” gradient_type=”default” shape_type=””][vc_column column_padding=”no-extra-padding” column_padding_tablet=”inherit” column_padding_phone=”inherit” column_padding_position=”all” column_element_direction_desktop=”default” column_element_spacing=”default” desktop_text_alignment=”default” tablet_text_alignment=”default” phone_text_alignment=”default” background_color_opacity=”1″ background_hover_color_opacity=”1″ column_backdrop_filter=”none” column_shadow=”none” column_border_radius=”none” column_link_target=”_self” column_position=”default” gradient_direction=”left_to_right” overlay_strength=”0.3″ width=”1\/1″ tablet_width_inherit=”default” animation_type=”default” bg_image_animation=”none” border_type=”simple” column_border_width=”none” column_border_style=”solid”][vc_column_text]When the pandemic hit the economy, dealers liquidated their inventories and market speculators bet short positions on Lumber\u2019s future contracts. No one expected booming housing market or remodeling\/renovation demand at the midst of pandemic. Lumber price plunged from $463 for thousand board feet pre-Covid to $260 in April 2020. Moreover, By April 2020, roughly 40% of North America\u2019s sawmill capacity was shut down. However, two factors flipped the coin and ensuing supply-and-demand imbalance sent the market-clearing price soaring:
\no Low interest rate along with rush to move outside of big cities, drove unprecedented demand for suburban housing, mostly single houses.
\no Restaurants raised to construct outdoor accommodation which is being done 100% by wood.
\nIs there supply-demand issue in the wood industry?
\nThe short answer is absolute NO! to prove that we have looked at the Logs vs. lumber\u2019s prices. Prices in logs and lumber usually move together but it was not the case in the past year. The problem is that there are so many trees out there and the sawmills could buy as much as they wanted even in the hottest market they had experienced in history. Thanks to the huge government subsidies in 1980s and 90s to landowners to farm tree, the volume of wood per acre in many of the southern counties has more than quadrupled between 1980 and 2020.<\/p>\n

What has happened since May 2021?<\/p>\n

Lumber prices have been on a rapid decline since their May 7th peak of $1,670. As of July 12th, the price has slipped around 55% to $713 per thousand board feet. Unwinding panic buying, increasing supply from sawmillers plants, less renovation driven demand along with economic reopening, and overall market rotation from commodities can explain this rapid move.[\/vc_column_text][vc_row_inner equal_height=”yes” content_placement=”middle” column_margin=”default” column_direction=”default” column_direction_tablet=”default” column_direction_phone=”default” text_align=”left” row_position=”default” row_position_tablet=”inherit” row_position_phone=”inherit” overflow=”visible” pointer_events=”all”][vc_column_inner column_padding=”no-extra-padding” column_padding_tablet=”inherit” column_padding_phone=”inherit” column_padding_position=”all” column_element_direction_desktop=”default” column_element_spacing=”default” desktop_text_alignment=”default” tablet_text_alignment=”default” phone_text_alignment=”default” background_color_opacity=”1″ background_hover_color_opacity=”1″ column_backdrop_filter=”none” column_shadow=”none” column_border_radius=”none” column_link_target=”_self” overflow=”visible” gradient_direction=”left_to_right” overlay_strength=”0.3″ width=”1\/2″ tablet_width_inherit=”default” animation_type=”default” bg_image_animation=”none” border_type=”simple” column_border_width=”none” column_border_style=”solid”][image_with_animation image_url=”12573″ image_size=”full” animation_type=”entrance” animation=”None” animation_movement_type=”transform_y” hover_animation=”none” alignment=”” img_link_large=”yes” border_radius=”none” box_shadow=”none” image_loading=”default” max_width=”100%” max_width_mobile=”default”][\/vc_column_inner][vc_column_inner column_padding=”no-extra-padding” column_padding_tablet=”inherit” column_padding_phone=”inherit” column_padding_position=”all” column_element_direction_desktop=”default” column_element_spacing=”default” desktop_text_alignment=”default” tablet_text_alignment=”default” phone_text_alignment=”default” background_color_opacity=”1″ background_hover_color_opacity=”1″ column_backdrop_filter=”none” column_shadow=”none” column_border_radius=”none” column_link_target=”_self” overflow=”visible” gradient_direction=”left_to_right” overlay_strength=”0.3″ width=”1\/2″ tablet_width_inherit=”default” animation_type=”default” bg_image_animation=”none” border_type=”simple” column_border_width=”none” column_border_style=”solid”][image_with_animation image_url=”12574″ image_size=”full” animation_type=”entrance” animation=”None” animation_movement_type=”transform_y” hover_animation=”none” alignment=”” img_link_large=”yes” border_radius=”none” box_shadow=”none” image_loading=”default” max_width=”100%” max_width_mobile=”default”][\/vc_column_inner][\/vc_row_inner][\/vc_column][\/vc_row][vc_row type=”full_width_background” full_screen_row_position=”middle” column_margin=”default” column_direction=”default” column_direction_tablet=”default” column_direction_phone=”default” scene_position=”center” top_padding=”2%” constrain_group_1=”yes” bottom_padding=”2%” text_color=”dark” text_align=”left” row_border_radius=”none” row_border_radius_applies=”bg” overflow=”visible” overlay_strength=”0.3″ gradient_direction=”left_to_right” shape_divider_position=”bottom” bg_image_animation=”none” parallax_bg=”true” parallax_bg_speed=”medium” gradient_type=”default” shape_type=””][vc_column column_padding=”no-extra-padding” column_padding_tablet=”inherit” column_padding_phone=”inherit” column_padding_position=”all” column_element_direction_desktop=”default” column_element_spacing=”default” desktop_text_alignment=”default” tablet_text_alignment=”default” phone_text_alignment=”default” background_color_opacity=”1″ background_hover_color_opacity=”1″ column_backdrop_filter=”none” column_shadow=”none” column_border_radius=”none” column_link_target=”_self” column_position=”default” gradient_direction=”left_to_right” overlay_strength=”0.3″ width=”1\/1″ tablet_width_inherit=”default” animation_type=”default” bg_image_animation=”none” border_type=”simple” column_border_width=”none” column_border_style=”solid”][vc_column_text]What we are watching:
\nFrom the demand side, the main catalyst for lumber is U.S. housing market. We watch US single-family units, the type which uses the most wood, closely.<\/p>\n

Uptimo Investment Research<\/p>\n

July 2021<\/p>\n

https:\/\/uptimo.ca\/<\/a>[\/vc_column_text][\/vc_column][\/vc_row]\n

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