Front-month Lumber Futures Settle at All-time Highs Thursday

Front-month Lumber Futures Settle at All-time Highs Thursday

#lumber #futures #cash

$LBU20

Lumber futures have more than 2X’s in price since the start of the year to mark their highest levels record.

Futures prices for the front-month September lumber contract settled at 939 per 1,000 board ft Thursday, the highest on record, according to Dow Jones Market Data. Prices based on the front months were up by nearly 132% YTD.

Both cash and futures hit all-time highs, exceeding previous highs. Analysts are describing the move as a parabolic, explosive move to the Northside.

There is a shortage of wood in the field, at the end-user, retail and distribution level,demand component is still greater than what exists supply wise.

Supplies of lumber had declined in March and April because of restrictions tied to stemming the spread of C-19. That probably led to a supply fall of around 15% to 20% in the market, as an 8-wk wind-down in operations led to significantly less production.

The September lumber contract is currently considered the spot month, meaning the nearest month for delivery. Still, the September contract stands at a discount to the November contract which trades on higher volume, with the spread between September and November at an all-time high. November lumber settled Thursday at 611.40, for a difference of more than 327 from the spot month.

Bottom line

The differential is not normal, not even close. Cash prices paid on the spot market may vacillate in a range between 500 and 850 in the next 6 wks, with 450 as a floor and 1,000 as a ceiling.

Have a healthy day, Keep the Faith!

The following two tabs change content below.

Paul Ebeling

Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he it the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.