If you still believe that home construction is a leading indicator in the economy, then the continuous contract for
lumber should be a valuable indicator.
The current price is about 670 a thousand. Inflation adjusted this is actually a pretty decent price, indicating a supply demand balance. The weekly chart is showing a bullish pattern with the 50 period moving average above the 200 period moving average. The daily chart is showing a bearish pattern with a cross of death.
Looking at the two charts and attempting to read the tea leaves, I would guess that there is technical as well as real economic support at the 600 dollar level. A failure of support below 600 dollars a thousand would be a signal that the demand for lumber has collapsed.
It takes money, a significant amount of the 670 dollars per thousand, the drag the logs out of the woods. With rising fuel and labor costs, it would take
a lot of demand destruction to get the price much below 500 dollars a thousand. In fact timber RIETS might be a value play at those levels.
It would also signal the collapse of home and apartment building. As this is a leading indicator we could measure and guess at the length of the recession.
Quzulight: If you still believe that home construction is a leading indicator in the economy, then the continuous contract for lumber should be a valuable indicator.
Well, if it wasn’t for the side donations to election funding interests that might be true?
US authorities move to double tariffs on Canadian lumber despite a meteoric rise in prices and demand
Will Daniel May 26, 2021, 4:07 PM
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The move to increase tariffs on Canadian lumber suppliers comes as lumber prices have risen over 275% since last April alone. Canada’s share of the US lumber market sits at around 25% as well, according to the Wall Street Journal.
Protectionist barriers to softwood lumber: A costly measure Français
NEWS PROVIDED BY
Montreal Economic Institute Jun 30, 2022, 06:00 ET
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MONTREAL, June 30, 2022 /CNW Telbec/ - The Canada-US softwood lumber dispute that has lasted some forty years is good for neither country, MEI researchers conclude in a publication launched today. The drop in Canadian production has direct consequences on this country’s forestry industry, and is not offset by the increased production south of the border, which leads to a net loss in the volume of wood available in the American market. This artificially induced greater scarcity of wood leads to higher costs for consumers.
“It would also signal the collapse of home and apartment building. As this is a leading indicator we could measure and guess at the length of the recession.”
I wonder how much lumber is used in building apartment buildings compared to single family homes? If there is a large shift from SFH to larger apartment buildings (cost, demand, etc), would this reduce the lumber required in a meaningful way?