Timber prices fall rapidly, turning hoarders into sellers

The price of wood falls back to Earth.

Futures for delivery in July ended Tuesday at $ 1,009.90 per thousand board feet, down 41% from the record high of $ 1,711.20 reached in early May. Futures have fallen 14 of the past 16 trading days.

Spot lumber prices are also plummeting. Pricing service Random Lengths said on Friday that its composite scoping index, which tracks on-site sales, fell from $ 122 to $ 1,324, its largest weekly decline on record. The pullback came just six weeks after the index rose $ 124 in the first week of May, its highest ever. Random Lengths described a chaotic rout in which sawmill managers struggled to provide customers with quotes. He said Tuesday night that his index fell another $ 114, to $ 1,210.

Economists and investors have questioned whether exorbitant prices for wood products would doom the booming real estate market. Builders have raised house prices and many have stopped selling houses before the posts were installed, lest they misunderstand the costs and over-sell. Lumber has become a central part of the inflation debate: whether a period of runaway inflation looms or high prices are temporary shocks that would subside as the economy moves away from the economy. locking.

The rapid decline suggests a bubble has burst and the question is how low lumber prices will come down. Even after the fall, lumber futures remain nearly three times higher than typical for this time of year. Lumber producers and traders expect prices to remain relatively high due to the strength of the housing market, but the supply bottlenecks and frenzied buying that has characterized the reopening of the economy and sent prices to multiples of old historical highs are shrinking.

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About Natalee Broderick

Natalee Broderick

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