Somehow I can't find racism in this behavior of the lumber market. But I am trying. Our leadership at BLM (Board Lumber Matters) tells me its there.
The trees are all kept equal by hatchet, axe, and saw.
a lot of “lumber” is white pine... Yeah.
In the past(prior to covid) sawmills were always their worst enemy. If prices went up, they all increased production. The theory being IF we are making “X” producing 1 million board feet/day, we will make even more if we add another shift and produce 1.6 million board feet/day.
The fact is the machinery is already there so why not use it. All you are paying is more logs, labor, maintenance and electricity.
So, if prices went up, mills always bumped up production and eventually OVERSUPPLIED the market. In 2020 production went down due to mill closures from covid. MEanwhile demand wen up because every person working out of the house decided to build a deck. Then everyone decided to move to the country and build a house or rebuild an existing house.
Now, the sawmills are having a tough time hiring enough people to run the mills. Sawmills a generally located in rural areas. many of these small towns only have X amount of people to work there.
A Boise Cascade mill in WA state just had to go from two shifts down to one because they can not hire enough people.
So, after hitting 1.8 million housing starts we are going back down. However, because we under built houses from 2008-2018 we are going to continue to build 1.4-1.5 million houses. Even if mortgage rates go up. It just means housing prices need to come down.
My prediction is lumber will hit its low for the year in October or November. FYI, July Lumber Futures contracts are currently trading at $564/m. Its high in 2020-2021 was $1630/m.
Because you have unconscious bias. That's right. This is the kind of crap I have to listen to where I work.