Huge Correction on the Softwood Lumber Futures Board, Cash Might Be Wallowing

A huge sell-off of futures this week took no one by surprise, then on Thursday a reversal to positive trades brought settlement this week to approximately US$555 but on minimal volume.
In cash, prices wallowed at close to last week’s levels, with significant adjustments on some specific items as price sheets stabilized. The long-awaited wood of this winter has finally been arriving on the railways, and sawmills are able to move freshly-produced wood out of their yards. Customers, for their part still reeling from these elevated prices of 2Q 2018, held off buying as much as they could, wrangling for orders on wood needed immediately.
Plump sawmill order files have been shrinking, and true summer break will soon be upon us. The recent momentum of demand which kept prices rising might have been satiated, at least for the time being.

Current Softwood Lumber Prices Compared to Recent and Historical Highs

SOURCE: Madison’s Lumber Reporter

A suddenly very contentious trade situation between the USA and several other countries has thrown Canadian softwood lumber exports to the US into further uncertainty. With all these moving parts in a constantly-changing landscape, sawmill operators and lumber sellers alike could become lost in a labyrinth of cross-border and retaliatory duties.

Canadian producers of cedar shakes and shingles are seeking to fend off new U.S. tariffs, waging war against the Trump administration more than three decades after Ronald Reagan imposed duties that lasted five years on the wood-roofing materials, said the Globe and Mail Friday.
Canadian firms say the products have been unfairly targeted with duties of 20.23 per cent. They have formed a group, the Shake and Shingle Alliance, to oppose their inclusion in the U.S. tariffs on softwood lumber.

SOURCE: Madison’s Lumber Reporter


The group’s members “were caught off guard” by the surprise addition of their products three months ago to the dispute over softwood lumber, according to a 55-page submission from the alliance this week to the U.S. Department of Commerce that asks for Canadian shakes and shingles to be exempt from tariffs.
“We request that the Department expedite to the greatest possible extent its review of this request and render a decision at the earliest possible time to prevent further injury,” the alliance said in its document, addressed to Commerce Secretary Wilbur Ross.