Lumber Futures Reverse Slide –

Lumber Apr 13, 2011 No Comments

U.S. lumber futures were up by the daily limit of $10 a 1,000 board feet Wednesday as reports of a large sale of wood to China filtered through the market, reversing a dramatic slide that saw the lead May contract lose a quarter of its value.

In spite of this rise, lumber futures for the nearby May delivery month have fallen 26% since March 25 on the Chicago Mercantile Exchange, trading as low as $237.20 a 1,000 board feet Wednesday.

The recent decline in lumber futures was blamed on increased first-quarter mill production that met stagnant domestic demand and exports that were strangled by shipping bottlenecks.

China emerged last year as a dominant buyer in western U.S. and Canadian lumber markets. Mills responded by ramping up production to meet export demand and take advantage of an expected seasonal surge in U.S. house construction as spring arrived. Yet shippers couldn't keep up with export sales to China and the spring housing demand failed to materialize, creating an oversupply problem that fueled the selloff, which started late last month.

Some market participants expected extra demand to resume quickly following the earthquake and tsunami in Japan. Rebuilding efforts haven’t yet driven a spike in global lumber demand, however.

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via Lumber Futures Reverse Slide –

Rod Sherkin

Rod is a former senior executive, responsible for Purchasing, for both Pillsbury and Ball Packaging back in the 80’s and 90’s. Since then, he has continued to work in the Purchasing field as both a consultant and founder of the website