Analysts forecast lumber prices will be 9.8% above the current November contract and the highest for the period since 1996, as North American mills saw lumber at the fastest pace in 6 years after a recovering U.S. housing market, a beetle infestation in Canada, and increasing Chinese demand drove the biggest price surge in two decades.
About 55.5 billion of the industry’s standard board feet will be made this year, 6.7 percent more than in 2012, CIBC World Markets estimates. Futures will average $371 per 1,000 board feet on the Chicago Mercantile Exchange in the fourth quarter, according to the mean of nine analyst estimates compiled by Bloomberg.
The strength of U.S. housing surprised mill owners, who had curbed production because of the recession and beetle outbreak, said David Elstone, an analyst at ERA Forest Products Research in Gibsons, British Columbia. Canadian output fell to 23.7 billion board feet last year from a peak of almost 36 billion in 2004. Supply won’t reach that level any time soon, he said.