Lumber futures rose the most in more than a year on concern that wildfires in western Canada will reduce supply and spur more curtailments at sawmills.

The rebound extends wild gyrations that took lumber prices from a record high in May on a pandemic-fuelled construction boom to an eight-month low earlier this week after demand eased and supply was replenished. British Columbia is Canada’s biggest exporter of lumber to the U.S.

“We expect further curtailments in the next two weeks,” BMO Capital Markets timber and wood products analyst Mark Wilde said in a report, while noting that inventories at many producers are ample after months of rebuilding supplies.

Lumber for September delivery gained 7.7 per cent to US$584 per thousand board feet at 11:24 a.m. on the Chicago Mercantile Exchange, the biggest percentage gain since April 2020. The price is still more than 60 per cent below the high reached in May.

Rail transportation in British Columbia has been hindered since a June 30 fire damaged the tracks of the two main railways that carry goods to Vancouver for export, causing congestion at the port. Lines have since been repaired, but rail movement has been slow and sporadically halted due to fires.

The wildfires are not completely bullish for the lumber market, said Westline Capital Strategies Inc. Chief Executive Officer Greg Kuta, whose Ohio-based firm specializes in lumber-trading strategies.

financialpost