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.
I’m thinking the same will occur with new auto prices once the semiconductors/chips start to make it to the end of the supply chain. There is no issue with production now.
It went up to over $60.00
Per sheet. I needed 2 sheet to make 2 floor cabinets since my counter top space is only about 4 feet, and there is none around the stove where I really need it. There is no way I can spend $60 on a sheet of plywood! That’s totally insane.
Waiting for this to happen with ammo.
Not holding my breath.
For a while lumber was so hard to get and the prices were so high I heard of lumber being smuggled into the country being disguised as cocaine.
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Bwahahahaha... spot on.
Cool. I was putting off replacing a 12’x12’ dock this summer due to lumber prices. It may be viable now.
You stole my line
Fake news. After a rapid 200% hike it is yet to get back to normal.
Durn!
I invested in a semi truck load of toothpicks hoping to sell them for a dollar apiece later the way prices were soaring.
Oh well, I got a thousand year supply of tooth picks now. Wink wink. Grin.
Durn!
I invested in a semi truck load of toothpicks hoping to sell them for a dollar apiece later the way prices were soaring.
Oh well, I got a thousand year supply of tooth picks now. Wink wink. Grin.
Had the prices dropped at Lowe’s yet. Need 2X6X12 PT. Last time I looked it was 21 bucks a board.
That’s what I could not understand. From home-fix-up shows one could find that certain companies were hoarding wood to drive the price up.
Well many builders just gave up on building houses for less than a million dollars and, in these parts, didn’t make anything for less that $2-$3 million. Maybe if you can plunk down $400,000 as a down payment you don’t worry so much about how much anything costs. Only a few such homes were built, therefore demand for lumber would drop.
“consumer hesitancy around record-high prices resulted in a sticker shock, and some home improvement projects were delayed.”
Duh! You think? That’s capitalism. The market will adjust to supply and demand.
The guy has a firm grasp of the obvious.
Out of curiosity, I checked. Note it is “Out of Stock”
Severe Weather 2-in x 6-in x 12-ft #2 Prime Pressure Treated Lumber.... $20.37
Item #198476Model #OG2P20612-AG
THIS ITEM IS OUT OF STOCK
I stopped in at Lowes and out of curiosity I walked through the lumber isle. Tire kickers only in the middle of the day.
Lumber sure went up and down this past year... steel as well (not as much as lumber) and cement only a small amount. I have to wonder where cement is going... it sure looks like there is going to be some very heavy demand and one would think that prices are going to rise a bunch.
I was told 3 months ago if I waited a year to buy wood to build a new fence I would be paying way more..☺
Ya gotta love all these financial experts.
Do you have a thrift/resale store near you that’s related to ‘Habitat for Humanity?’
You might be able to find ready-made cabinets there at a good price!
https://habitatdane.org/restore/
They also list inventory on Facebook:
https://www.facebook.com/restoremadison
Not sure if this is a nation-wide thing, but I’d think so? The organization is nation-wide.
Bloggers. What would we do without them?
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