FX.co ★ Lumber Drops Toward $600

Lumber futures have dipped toward the $600 mark per thousand board feet, pulling back from the May 2022 peak of $695.5 observed on August 1st. This decline is attributed to a combination of weakening demand, a recovery in supply, and trade-related distortions affecting the market. In the United States, building permits fell to their lowest since June 2020 in July, signaling potential interest rate hikes, which, alongside the growing inventory of unsold homes, further suppressed immediate construction demand, thus tempering the core market for lumber. On the supply front, Canadian mills have boosted production after previous cutbacks, with Statistics Canada noting a recovery in production and shipments expected to continue through mid-2025. Tariffs and trade measures affecting Canadian exports have primarily redirected lumber rather than causing shortages, allowing for inventory accumulation and thus capping price growth, despite global interest rate projections—shaped by Powell's comments at Jackson Hole—hinting at possible future demand support.