U.S. lumber prices are near an eight-year high as demand for the staple commodity of the American housing sector has risen on the back of a pick-up in new home construction.
Lumber – or sawn timber – futures contracts for March delivery stood at $380 per 1,000 board ft on the Chicago Mercantile Exchange on Friday, after nearing $400 in late December – the highest since mid-2005.
Prices rose by almost 45% in 2012 alone, as builders have constructed more homes in response to an uptick in demand from homebuyers eager to take advantage of record-low mortgage-interest rates. Softwoods such as spruce, pine and fir are used to make lumber for homebuilding materials such as boards and plywood.
Lumber prices have also been boosted by supply disruptions because of the shutdown of some North American manufacturing plants since the downturn. Renewed export demand from China and a mountain-pine-beetle epidemic that is taking its toll on lumber production in British Columbia, Canada are additional factors.
“We’re at the beginning of a long upward cycle in the housing market,” said Paul Jannke, principal at Forest Economic Advisors, a Massachusetts-based consulting firm. “Total consumption of lumber in the U.S. will be up 10-15% a year for the next three years at least. Demand is still well below historic levels.”
From The Financial Times: http://www.ft.com/intl/cms/s/0/260953fc-5c18-11e2-bef7-00144feab49a.html#axzz2Hy3ysRU4