Lumber prices drive higher
December 24, 2012
Lumber contract trading has continued in earnest despite the holiday season, during which it traditionally slows down. Unexpectedly high demand drove the Random Lengths Composite price higher, finishing December 21 at US$373/mbf. This is a psychologically important level, because this is the highest price in more than six years. Indeed, it is necessary to go back to May 5, 2006 for a higher price to the composite: US$377/mbf.
Random lengths composite price (2002-2012)
May 2006 was the peak of the U.S. housing bubble: seasonally adjusted U.S. single family housing starts stood at 1.6 million (they currently stand at 565 thousand), and average U.S. housing prices (as reported by Case-Shiller) were 44% (!) higher, Canada’s softwood lumber exports to the U.S. were more than 110% higher. We have already noted that prices as high as they are today, in spite of demand so relatively weak (though improving) implies very strong prices over the next three years.