Lumber prices soar 29% in February as reopening boosts commodities rally

  • Lumber has jumped nearly 30% so far this month, alongside the broader rally in global commodities.
  • Commodity prices rose amid cold winter weather and geopolitical tensions, among other factors, an expert said.
  • The falling US dollar is also a reason for the rising prices, the expert added.

The price of timber has risen nearly 30% so far this month, in line with the broader recovery in global commodities as economies around the world reopen.

“I think it’s part of the larger commodity movement,” David Russell, vice president of market intelligence at online brokerage TradeStation, told Insider. “We have kind of a broad shift of money into commodities and materials in the broader market.”

Russell said commodity prices — including those for iron, oil, soybeans and fertilizers — mostly rose amid cold winter weather, geopolitical tensions and supply chain disruptions.

After a brief cooling in recent weeks, lumber futures rose for the sixth straight session on Wednesday, hitting $1,204.90 per thousand board feet, its highest level for the month.

That’s a 29% jump from Feb. 1, when the critical building material traded at $934.90 per thousand board feet. Still, lumber is 30% below its all-time high of $1,711 hit in May 2021.

Russell also attributed the recent jump in lumber to the falling US dollar on Wednesday ahead of key consumer price data. When the dollar weakens, general commodity prices strengthen, giving the two an inverse relationship.

Lumber prices have skyrocketed over the past year in part due to distorted supply chains during the pandemic. For example, shipping issues at Resolute Forest Products, one of Canada’s largest producers, have strained the supply of lumber.

In addition to price pressures, there is a focus on construction and home improvements as more Americans seek to adjust to the work-from-home trend.

“Many of the same things that have caused lumber prices to rise over the past six months to a year continue to affect lumber prices today,” Chip Setzer, Director of Trade and Growth for the Mickey group, a commodity trading platform, initiated. “The demand for forest and wood products remains high and the supply remains limited. »

Michael Goodman, Manager of Specialty Products at Sherwood Lumber, agrees and adds that this trend will continue for the foreseeable future.

“Between the combined extreme demand, weather, trucking, and various other supply chain issues, [lumber] continues to push the price to new highs,” he told Insider. “We are only into February and are seeing record months for volume. Most expected a slowdown due to interest rates, but the daunting task continues and will continue for some time.”

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