Lumber futures have fallen to levels not seen since November, in a stark reversal from all-time highs set final yr in the course of the COVID-fueled homebuilding increase.
Chicago lumber futures (LB1:COM) for July supply fell on Wednesday by the change most $49, or -7.5% to $604.50 per 1,000 board toes, extending this yr’s droop to 46% and almost two-thirds under the height of $1,733 per $1,000 board toes from a few yr in the past.
“Lumber markets are probing for a flooring,” Kevin Mason, managing director of ERA Forest Merchandise Analysis, instructed Bloomberg, citing plunging house gross sales and better rates of interest, including lumber costs might fall to $400 per 1,000 board toes within the subsequent two months earlier than producers curb manufacturing to take away extra provide.
Gross sales of newly constructed houses plunged 16.6% in April from March to the bottom stage since April 2020, on the peak of the COVID lockdowns within the U.S., and the most important drop in 9 years.
Lumber patrons have slowed orders and wooden is piling up at mills, that are weighing on prices, pricing service Random Lengths stated, in line with The Wall Avenue Journal.
However barring a recession, Matthew Saunders of John Burns Actual Property Consulting instructed WSJ that he doesn’t anticipate lumber costs to fall all the way in which again to pre-COVID ranges, which hardly ever exceeded $500 per 1,000 board toes, as a result of many issues in Canada’s western forests, the place mills have struggled with fires, floods, excessive costs and hard-to-get timber.
Canfor (OTCPK:CFPZF) stated final week that its Canadian sawmills have been working at ~80% of manufacturing capability since late March, and can continue reduced operating schedules due to ongoing global supply chain challenges.