Posted on 12/14/2021 5:34:38 AM PST by Browns Ultra Fan
Lumber prices are above $1,000 for the first time since early summer as a hot housing market continues to drive demand.
According to Markets Insider, lumber prices are up 127% from its most recent low. With demand high and supplies low, record low interest rates still drive homeowners to the market, so much that builders are struggling to keep up.
Note the surge in lumber futures prices back in April and May 2021 that eased. But lumber futures prices are gaining steam again.
Let’s see what happens to lumber prices and new home prices if and when The Federal Reserve decides to takes its gargantuan foot off the monetary accelerator pedal.
In other housing-related news, China’s Evergrande remains in the news as its stock price founders.
Perhaps Evergrande should declare bankruptcy.
(Excerpt) Read more at confoundedinterest.net ...
Could be quite a wait.
And Dems happy to kill a merely now-authoritarian government to get to a totalitarian one.
This will help
11/30/21
“The Biden administration’s US Commerce Dept. on Nov. 24 followed through with expected anti-dumping and countervailing duties on Canadian softwood lumber producers, placing tariffs of 17.99% on their imports, more than twice the rate of 8.99% during the Trump administration.“
It is very likely to crash back at least 45% very soon.
The lumber industry is dealing with the same factors other production industries are having. They are having a problem hiring people to work.
In addition there was a cataclysmic weather event in British Columbia on November 15th. Multiple sawmills and the towns they resided in were flooded. The CN railroad and multiple highways in BC were blocked. This caused some additional pulp mills to shut down because they could not move their products to Vancouver. In addition the closing of the CN line caused rail traffic moving down the coastal US (WA, OR, NV, AZ to all be delayed or rerouted.
The largest sawmill in Canada(West Fraser) stopped selling lumber by rail car for 3 weeks. They initially started selling only by truck to the US. They suspended this after about a week. There are only so many trucks available in BC.
I personally have a truck sold to Boise that was ordered on 10/19 for w/o 11/1 shipment. It finally shipped yesterday. Over a month behind schedule.
Meanwhile all of our customers that use lumber are extremely busy. There has been virtually no winter weather in the US limiting demand. Housing demand(1.6 million starts) is continuing to be very good as people continue to exit the cities and move to the suburbs and more rural areas.
In addition other major lumber consuming industries such as wooden pallets are setting records. Pallet prices are at all time highs.
Home center business is also very good. Typically it reduces after October. This has not been the case so far. People continue to invest in home owner projects. They feel confident investing money into their house. More so, than the stock markets. Also, many people are choosing to remodel their existing home instead of buying a more expensive home in the same area.
Lastly, other areas of the world such as OIL producing countries are increasing their demand for construction materials. Plus the European countries are starting to increase demand for building materials. Great Britain is finally getting over Brexit and getting back to business.
I would not look for a major correction in lumber pricing until late spring. Many companies got caught with low inventories going into the last quarter. Prices corrected down to their most recent lows in August. We went up until November 15th. Now, we are trying to build inventories for the first quarter. The mills are firmly in control now. The customers are screwed. We may very well go right back up to $1700. DO NOT BE SHORT.
All these point to overall good demand for lumber, plywood & osb.
7/16” x4x8 OSB sheathing currently $18.99 where I am. Used to be $9.88.
It is a possibility, but I heard the same thing during the last spike.
Of course, if there is hyperinflation it may be three times your target.
7/16” got up to $70/sheet last year.
It was about $7/sheet in 2019
Yeah, seems like I remember $7.88 for a little while.
What caused the major correction last time was when Home Depot and Lowes told their supplies on Memorial Day to stop shipping product. That they had too much inventory.
The other factor was that lumber got so high that it was being talked about regularly on Fox Business, The Wall Street Journal and other equities publications. Typically, in the past whenever lumber is mentioned/noticed by the major news outlets it is the kiss of death to the market.
I am looking at the market based on technicalities. Unless there is hyperinflation there is no way the current prices are going to be sustainable. You can use cement to build houses.
😅
My wife said “ tell me you love me and take me somewhere expensive. “ I took her to the lumbar isle at Home Depot.
Thank you for an “insider’s look”. I’m a serious DIY’er...and very thankful that I’m done with this house except for some minor trim work in the garage. I choke looking at the prices for trim...even MDF. For years, I’ve hung onto a 4x8 sheet of half-inch B grade plywood. Never needed it, but didn’t have the heart to get rid of it. Now I know why I’ve kept it!
Home Depot should put in a wine bar.
Futures is correcting right now. We could be in for a correction in futures that would bring it back to just under $1000/mbf.
Then it will rally back up, potentially going to $1300.
Great info. Thanks!
I generally think around the same lines.
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