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Lumber Commodity Contracts Trend Downward As Construction Projects Across Country Get Canceled or Postponed; Retail Lumber Prices Still Sky High

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Lumber Futures have been on a downward trend with hints of volatility still heavily mixed in. Eye of the Storm???

Lumber brokers across the country have signaled what they believe to be a trend heading downward for lumber prices and report it to be a time to purchase inventory for building supply companies. While it is possible that this may be a time to purchase inventory it also may be the eye of the storm.

Projects across America are now seeing the ripple effects of inflation grab hold to project budgets. The rising prices are putting projects over budget, bankrupt, on hold, and or cancellation in its entirety.

Sample of some of these reports in the news are:

$64 Million Dollar Clearwater, Fl Project Has Been Canceled

Developer Cancels Contracts To Home-buyers For 15 New Construction Homes

Construction Of New Creston Village Library Postponed

We have seen project cancellations on the rise throughout residential markets and public spaces that may point to the partial reason for the recent downward price trend of lumber commodities. Demand. The flurry of lawsuits, breach of contracts, and out right cancellations are started to grab hold and surface in the construction industry as budgets are being blown through out the U.S.

Although the U.S. has seen upward mill production, new mills coming online, and government intervention, demand is still at an all time high whether being executed or not and the rest of the world is now dealing with what the United States has been enduring. Other countries are seeing sky high demand and prices as the problem circles the globe. Russia has signaled that ALL EXPORTS may halt outside the country soon. China continues to be one of the largest importers from whatever country they can hoard along with their new high speed rail train hauling max loads from Russia along with raw logs imported by ships from all over the world.

The downward trend in lumber futures where July contracts are at still at $1284 MBF from its recent highs of near $1800 are better of course but retail is still sky high. A Bylt survey today has the popular pre-cut lumber sizes of 92 5/8” 2” x 4” at $11.72 Each and 92 5/8” x 2” x 6” at $17.78. Prices 3 times higher then “normal”. To put this into further prospective those retail prices equate to about $2275.00 MBF from the average of around $400 in late 2019. To further complicate the situation panel board has also climbed to new highs bringing all the main components of building a home or apartments into the red zone.

Commodity future contracts do not spell the future price of lumber but more traditionally they do represent what to expect in a normal market.

MonthOptionsChartsLastChangePrior SettleOpenHighLowVolumeUpdated
JUL 2021JUL 2021Show Price Chart1284.20006:00:00 CT
07 Jun 2021
SEP 2021SEP 2021Show Price Chart1141.50006:00:00 CT
07 Jun 2021
NOV 2021NOV 2021Show Price Chart987.80006:00:00 CT
07 Jun 2021
JAN 2022JAN 2022Show Price Chart949.20006:00:00 CT
07 Jun 2021
MAR 2022MAR 2022Show Price Chart939.20006:00:00 CT
07 Jun 2021
MAY 2022MAY 2022Show Price Chart895.20006:00:00 CT
07 Jun 2021
JUL 2022JUL 2022Show Price Chart895.20006:00:00 CT
07 Jun 2021

This is not a normal market and all eyes should be on current conditions such as this weeks inflation numbers & CPI report, droughts, wild fires, tariffs, shipping costs, and the global supply chain crisis. The current economics are incomplete and in almost in a non resolution position. Strong attention will be on this week inflation and CPI reports that most likely will suggest that the demand is being subdued temporarily by project postponements and cancellations while we focus on the fiscal years inflation back-draft coming to fruition on projects underway. The construction industry will be with uncertainty and no resolution until reports suggest a resolution not only with interest rates and inflation, but also the rhetoric on the infrastructure bill and the labor shortages that continue to plague the U.S.

Source The Bylt Team CME LUMBER FUTURES
Via The Bylt Team

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