Runaway Lumber Market Gathers Yet More Steam

If lumber suppliers didn’t know what to do last week, this week was even more bananas. As explained by one veteran lumber trader on LinkedIn Friday:
“Frustration reigned as the lack of availabilities and tardy shipments frazzled many. The concern is that there does not seem to be any end in sight [to logistics and supply chain problems].”

Current Softwood Lumber Prices Compared to Recent and Historical Highs

The below table is a comparison of June 2017 and May 2018 prices for benchmark dimension softwood lumber 2×4 prices compared to historical highs of 2004/05:

SOURCE: Madison’s Lumber Reporter

As the constant concern over limited lumber supply and ongoing transportation problems loomed, sawmill resisted taking new orders and thus raised prices on what inventory they did have to sell. Reloads and wholesalers stepped in to pick up sales on their own, admittedly, tight inventories. Prices responded by bouncing a healthy leap upward.
On the lumber futures trading board at the Chicago Mercantile Exchange, for the latest contract close on May 15 prices skyrocketed by $44 then plummeted down $31 the next day. This is on tiny volumes; however the occurrence of yet another unprecedented event for the business of forestry in the past year is a sign of starkly ever-changing things to come.

SOURCE: Madison’s Lumber Reporter