FX.co ★ Lumber Near September-2024 Lows

Lumber futures have declined to approximately $540 per thousand board feet, approaching the lows observed in September 2024, largely due to a significant oversupply amidst ongoing weak demand. The industry is grappling with an excess supply as housing starts and building permits fall below levels seen in the previous year, thereby reducing consumption. Sawmills have maintained excessively high production rates in the face of a weakening cash market, resulting in dealer yards being overstocked. This glut has been exacerbated by earlier speculative pre-ordering by buyers aiming to hedge against potential tariff increases. These inventories are now being sold at discounted rates in a sluggish market. Coupled with elevated mortgage rates and the seasonal construction slowdown, these conditions have compelled major producers to announce reductions in production and mill closures in an effort to rebalance the market dynamics.