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.
Prices go up: Women and minorities hurt most!
Prices go down: Prices hurt most!
(Just remember: All news is bad news!)
Exactly!
I feel their pain. The prices are in such pain. Ohhhhh the pain!
Yet I still cannot afford a damn piece of plywood to fix my back porch.
$90 at Lowes.
That’s insane.
Prices need to hurt more!
While you are shedding that tear, why don’t you donate to FR?
Lies, damn lies, and statistics.
Meaningless stat.
See “Portable Sawmills” A couple of guys figured it would be more economical to buy one and cut their own lumber to finish their project. Then sell it.
I love this Country!
Good. Let them suffer. Of course, they sang on the way to the bank with the $$$$$ they made off jacked up prices.
Done!
Yup, and that’s why I’m somewhat glad we can’t get a contractor here in North Idaho that can begin construction earlier than 10 months out.
Now if you could only do something about those d@mn bloggers!
Indeed. That's the unspoken hooker in all this "Transitory" crap that I wish some reporter would ask these Fed spinmasters, i.e. "When you say 'Transitory', do you mean prices will fall back to their old levels or only part way?"
"crickets" or . . "What about those UFOs?"
Around that price. Yeah. Usually only one brand of PT in stock. 21-22 bucks a board. Not much to choose from.
Agree
Fake News
bookkeeper for a construction company and the prices are not dropping
You wouldn’t know it if you went to Home Depot or Lowes today.
It probably will take some time for those prices to drop to match the futures drop.
“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.”
Many financial experts are academics who follow their ideology rather than reality.
The only way to defeat inflation, is to withhold purchasing until pricing aligns with your income. If you use panic/emotion based purchasing then you actually provide fuel for inflation.
Take your time and let the price come to you.
So much speculation. Same with the insane price of copper right now.
You bet.
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