On Wednesday, the\u00a0futures price for framing lumber\u00a0hit $870 per thousand board feet. That’s up 124% since August. And it’ll only be a matter of time before this hike trickles down into the wholesale “cash” market (currently priced at $611 per thousand board feet) and then the retail price in the aisles of places like\u00a0Lowe’s.<\/p>\n\n\n\n
What’s going on?\u00a0This current run\u2014which has seen lumber prices rise 11 out of the past 13 weeks\u2014started with the return of do-it-yourselfers into the market once prices came down this summer. At the same time, sawmills curtailed softwood lumber production in the face of a\u00a0bad wildfire season in the U.S. Pacific Northwest and British Columbia. That combination of falling supply and rising demand\u00a0pushed prices up 40% by late October. But the run on prices didn’t kick into high gear until a\u00a0record rainfall hit British Columbia\u00a0last month. The\u00a0ensuing flooding and mudslides destroyed bridges and roads, causing mayhem in an already-stretched wood products supply chain.<\/p>\n\n\n\n
“The disastrous flooding and washouts that took place in the southern part of British Columbia in mid-November has significantly altered market conditions and overall sentiment. Critical truck and rail routes have been impacted by the record flooding, and while some of the most severe disruptions appear to be resolved, bottlenecks with shipping and distribution will probably last several weeks,” Dustin Jalbert, a senior economist at Fastmarkets RISI who covers the lumber market, tells\u00a0Fortune<\/em>. “In response, we\u2019ve seen a ramp up of buying as wholesalers and retailers look to secure supplies for fear of being caught short again for the spring 2022 building season.”<\/p>\n\n\n\n The situation was made worse, Jalbert says, by the\u00a0U.S. Department of Commerce announcing last month that it finalized its plan to double the tariff on Canadian lumber shipped to the U.S.\u00a0in 2022 (from 8.99% to 17.9%). In response, some lumber yards upped their order volume as a way to lock-in the price before the tariffs goes into effect.<\/p>\n\n\n\n The latest run raises the question: Do resurgent wood prices foretell that other goods (like gasoline or semiconductors) will also struggle to return to their pre-pandemic price even after they see an initial price correction? Lumber prices,\u00a0which first started to spike in the summer of 2020, were after all\u00a0the canary in the coal mine\u00a0for existing shortages that continue to plague the economy. So maybe it’s again foreshadowing something?<\/p>\n\n\n\n It’s hard to say.<\/p>\n\n\n\n The dynamics driving this current lumber run, including flooding in British Columbia, are very different from\u00a0the supply and demand issues\u00a0that drove the\u00a0spring lumber run. That said, the reason lumber prices were susceptible to this latest run is because of the lingering pandemic dynamics\u2014elevated demand and worker shortages\u2014that continue to bog down the overall supply chain.<\/p>\n\n\n\n Mark Zandi, chief economist of\u00a0Moody’s\u00a0Analytics, tells\u00a0Fortune<\/em>\u00a0that while\u00a0the worst of the shortages will soon be in the rearview mirror, some shortages and supply chain issues could take until beyond 2022 to get resolved. As long as the supply chain remains stretched, goods will remain vulnerable to large price runs caused by unexpected events like hurricanes or refinery fires.\u00a0In that way, lumber could once again be the canary in the coal mine.<\/p>\n","protected":false},"excerpt":{"rendered":" On Wednesday, the\u00a0futures price for framing lumber\u00a0hit $870 per thousand board feet. That’s up 124% since August. And it’ll only […]<\/p>\n","protected":false},"author":2,"featured_media":1785,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-2102","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-novosti"],"translation":{"provider":"WPGlobus","version":"2.12.2","language":"ar","enabled_languages":["en","ru","ar","tr","zh"],"languages":{"en":{"title":true,"content":true,"excerpt":false},"ru":{"title":false,"content":false,"excerpt":false},"ar":{"title":false,"content":false,"excerpt":false},"tr":{"title":false,"content":false,"excerpt":false},"zh":{"title":false,"content":false,"excerpt":false}}},"_links":{"self":[{"href":"https:\/\/uwgroup.com.tr\/ar\/wp-json\/wp\/v2\/posts\/2102","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/uwgroup.com.tr\/ar\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/uwgroup.com.tr\/ar\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/uwgroup.com.tr\/ar\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/uwgroup.com.tr\/ar\/wp-json\/wp\/v2\/comments?post=2102"}],"version-history":[{"count":1,"href":"https:\/\/uwgroup.com.tr\/ar\/wp-json\/wp\/v2\/posts\/2102\/revisions"}],"predecessor-version":[{"id":2103,"href":"https:\/\/uwgroup.com.tr\/ar\/wp-json\/wp\/v2\/posts\/2102\/revisions\/2103"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/uwgroup.com.tr\/ar\/wp-json\/wp\/v2\/media\/1785"}],"wp:attachment":[{"href":"https:\/\/uwgroup.com.tr\/ar\/wp-json\/wp\/v2\/media?parent=2102"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/uwgroup.com.tr\/ar\/wp-json\/wp\/v2\/categories?post=2102"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/uwgroup.com.tr\/ar\/wp-json\/wp\/v2\/tags?post=2102"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}