Samko Timber

Lumber prices remained near $530 per thousand board feet in August, hovering at an eleven-week high as fears of a US recession eased following positive economic data, while expectations of interest rate cuts in September bolstered the demand outlook. The weakening US dollar has made lumber more affordable for foreign buyers, driving increased international demand and contributing to the upward trend in prices. Adding to this optimistic scenario, Canadian housing starts surged to their highest level in over a year, signaling stronger demand for wood and construction materials. Meanwhile the average rate for a benchmark 30-year mortgage in the US remained below 6.5%, its lowest in one year. However, preliminary estimates indicated a 4% decline in US building permits in July, which fell to a seasonally adjusted annual rate of 1.396 million, the lowest in four years and below the expected 1.43 million, limiting the rise in lumber prices.

Lumber prices surged above $450 per thousand board feet in July, bouncing back strongly from a year-and-a-half low of $419 observed on July 15th, fueled by increased demand expectations for wood and construction materials in major economies. Dovish signals from major North American central banks also contributed to the price increase, as easing inflation and a cooling labor market in the US and Canada have heightened expectations for accommodative monetary policies, potentially leading to lower bond yields and improved mortgage rates, bolstering the housing market. Meanwhile, speculation about Chinese stimulus measures heightened following softer-than-expected GDP growth. However, sustained weaknesses in US and Canadian housing starts, permits, and pending sales continue to exert downward pressure on prices amid prolonged downturns.