Lumber futures initially extended gains from its contract lows in early October despite both hardwood and softwood prices being at their lowest levels in 10 years. Lumber futures are currently up $17.30 today currently trading at $321.20 per 1,000 board feet at the Chicago Mercantile Exchange.
Hardwood fiber prices continued to fall in most of the major pulp-producing countries in the world as of last year’s fourth quarter with the biggest declines seen in Brazil, Chile, Russia, France, Germany and Indonesia. With the exception of the US South and New Zealand, softwood fiber prices were also down throughout the world at the end of last year with the decline ranging between 2% to 10% from the previous quarter.
“Lumber (futures) prices seem to have fallen in tandem with the high of the domestic housing market,” said Kevin Craney, Director of Managed Futures at RJO Futures in Chicago, sharing his fundamental assessment of the lumber futures market. Craney added, “Much of the US lumber and building materials were devoted to overseas rebuilding of war-torn areas in Iraq and Afghanistan, but these efforts have wound down a few years back.”
The daily trend for lumber futures is currently up on what appears to be a technical rally from the early October and late January lows. I would expect lumber futures to climb to the next resistance level of $360 initially, and then possibly $380, until we see a resumption of the overall lower weekly trend, or at least a test of its October lows.
ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.