Recent tariffs, counter-tariffs, retaliatory-tariffs, and other major trade issues have people concerned. Softwood lumber is no different. In an effort to shine some light on what has been happening in this new fast-changing world of forestry we are now in, Madison’s produced a report in 1Q explaining a few things.
Particularly the question of : Is there a Canadian price for lumber (excluding duty)?
This is a very difficult question to answer properly. Madison’s approach was to look at recent changes to Canadian softwood lumber export prices to other countries that USA. For this, Japan is an excellent choice. There is a long-established history of North American wood sales to Japan, so movement with this would be a good indicator of the market in general.
READ OUR 3-PAGE REPORT HERE: https://madisonsreport.com/wp-content/uploads/2018/07/CanadaDomesticLumberPriceQuestion.pdf
Please find below the results of our investigation into questions regarding a possible difference between North American softwood lumber prices into USA and those domestically within Canada, in view of the latest US softwood lumber duty.
Further details in the sections that follow:
OVERVIEW OF CURRENT NORTH AMERICAN LUMBER MARKET
A question has arisen:
- why there is apparently no price difference between Canadian sales to domestic markets and sales to US export markets.
The short answer is: because the Canadian market is too small. These customers do not buy in large enough volumes to be able to influence the direction of prices.
The longer answer is: the established supply chain for the movement of Canadian wood assumes it will be delivered across the US border. Even though exports of Canadian wood to the US have dropped from a stable 85% of total historically to 60% since the US housing crash of 2006, transporters expect this product to move south.
In essence; the producers “don’t care where the wood is going” once it leaves their sawmill gate.
