Posted on 07/01/2021 1:33:24 PM PDT by blam
Lumber futures on Chicago Mercantile Exchange plunged more than 40% in June, suffering the worst ever monthly decline on record dating back to 1978. Prices are down 18% in 2021 and recorded the first negative first half since 2015.
Lumber peaked in late April/early May at around $1,711 per thousand board feet, and as of Thursday morning, prices are down more than 4% to $684. It appears the great lumber bubble of 2021 has encountered a classic commodity blowoff top, down -60% from the highs.
Readers may recall we’ve been closely following the lumber bubble:
The latest drop in prices “suggests that the cause of that inflation—the mismatch of supply and demand—will not last forever,” said Brad McMillan, CIO at Commonwealth Financial Network. “As suppliers across industries get their acts together, those shortages will fade, along with the inflation. That looks to be happening for lumber now and will happen for other inputs later.”
Goldman Sachs’ commodity analysts told clients Tuesday that consumer hesitancy around record-high prices resulted in a sticker shock, and some home improvement projects were delayed.
Weakness in lumber prices in the second half could offer relief for homebuilders who’ve been stunned by skyrocketing costs. The latest housing report showed May permits plunged to the lowest level since October. The chart below suggests surging costs are halting new construction.
“It was a bubble, but it is still double where it was pre-Covid,” said Peter Boockvar, CIO at Bleakley Advisory Group. He believes the lumber bubble might have burst, but prices may remain elevated, suggesting the inflation threat may still linger.
Boockvar could be right. The new normal for lumber prices may remain doubled from pre-COVID levels. The term structure of lumber futures is an utter shitshow, but prices do appear to remain much higher than 2019 levels.
BMO Capital Markets’ commodity desk also agrees that prices may not return to pre-pandemic levels any time soon.
Poor lumber prices, “suffering” a big drop. Let’s shed a tear.
Gotta clear out the higher priced stock first.
Hmmm… supply and demand coupled with a free competitive market and private enterprise works. Who knew!
It says it is still double from pre-COVID. That is significant.
Hmmm… supply and demand coupled with a free competitive market and private enterprise works. Who knew!
The cure for high prices is high prices.
So much suffering. No end to the suffering.
“Gotta clear out the higher priced stock first.”
...some lumber yards may use the more expensive lumber as a “loss leader”. Sell it at a loss to attract more buyers.
Yeah, came here to lament the suffering lumber.
The supply chain is clogged to the gills. The products are there, they just can’t get here.
This is a good sign.
People overreacted on both sides. The demand is still high and production has only increased marginally. Prices are being driven by emotion.
Don’t expect the price drop to be reflected at your local lumber store for at least 6 months. They still have their costs to cover what they paid when they ordered it.
Prices are just as high yesterday as they are today..Except Treated lumber is dropping as I bought some yesterday and today yet untreated prices remain out past the Moon price wise..
‘Lumber Bubble.’ *SMIRK*
Gotta make hay while the sun shines! SOMEONE is making big, BIG money off of this, so as the last line in the article said, don’t expect PRICES to we CONSUMERS to drop any time soon. :(
This winter we paid $23 a sheet (bought 12) for birch plywood we needed to go down under new flooring we installed ourselves. Normally, those 4x8’ sheets run $12. As of today (at Menard’s, where we bought them) they are $40.04 each!
So, I ‘saved’ $204.48, Right? *SMIRK*
The worst ever monthly decline.
Leave it to these idiots to present good news for consumers as something terrible.
Good! They needed to drop. Prices were getting ridiculous.
Sawmills make bank at $600.
I came to see how it is Trump’s fault, minorities and communities of color are hardest hit, and see how it is all because of the most brilliant president in history, Biden, brought down the price with his magical declarations....
OH WAIT. This isn’t CNN. Sorry.
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