Lumber prices are headed back up after a seven-day sell-off

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  • CNBC Television published this video item, entitled “Lumber prices are headed back up after a seven-day sell-off” – below is their description.

    Lumber prices are going back up after a rough seven-day sell-off. Prices have fallen every day since lumber hit a record of $1,711 per thousand board feet on May 10. Despite this, the price of lumber is still up about 340% compared to a year ago. For access to live and exclusive video from CNBC subscribe to CNBC PRO:

    Lumber futures gyrated in wild trading on Wednesday as traders struggled to determine if a recent pullback in wood prices had removed enough froth from the market.

    Lumber futures for July delivery at first fell 5% to $1,201 per thousand board feet Wednesday morning, only to turn positive and rally 5% by the afternoon. Prices hit what’s known as limit down, and then limit up, the maximum percentage changes allowed by the Chicago Mercantile Exchange, where the futures trade.

    Prices have fallen every day since lumber hit a record of $1,711 per thousand board feet on May 10. Despite the swoon, the price of lumber is still up about 37% in 2021.

    “Price stifled demand. Period. There’s no other question about it,” Robin Cross, a commodities broker at StoneX, said of the recent pullback from highs. “It’s not like I have a whole bunch of guys calling and selling it. What’s really happening is guys bought high-priced inventory, and they’re afraid to add to it. … No one wants to get left holding the $1,700 bag.”

    Tens of thousands of stuck-at-home homeowners, and new homebuilders, have for much of the last year snapped up processed pine by the ton. But more recently, with sawmills unable to keep up with demand as the calendar turned to spring, a speculative frenzy entered the market with traders bidding up prices aggressively since March.

    Single family housing starts dropped 13% in April, the biggest decline since the Covid pandemic hit, data this week showed. The rise in lumber costs was partly to blame for homebuilders slowing production even as housing demand increases.

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