Changes Coming to Random Length Lumber Futures Trading

Chicago Mercantile Exchange will launch updated futures trading in August under the ticker LBR

CME Group is set to launch a new lumber futures contract on August 8, 2022. The new derivative is said to feature a more precise hedging acumen and is designed to be more accessible to producers.

The new futures are now sized at 27,500 board feet, characterized by the derivative exchange as “a single truckload to enable more tailored risk management strategies.”

The delivery point has also been set to Chicago Switching District where the futures will be physically delivered “allowing for a wider breadth of market participation from both western and eastern producing mills.”

Research firm IBISWorld estimates the lumber wholesaling industry at around US$200.8 billion for the year, sporting a 14.2% annualized market size growth from 2017 to 2022.

The deliverable species have also been extended to include SPF (stamped SPF), Douglas Fir, Fir Larch, and Hem Fir, which is expected to make the pricing more precise and inclusive:
SOURCE: CME Group website

Options on the new lumber futures will also be launched on the same day. Minimum price fluctuation is set at US$0.10 per mbf (US$2.75 per contract).

The futures are set to trade on CME ClearPort and CME Globex, under the code “LBR”.