FX.co ★ Lumber Rebounds From Yearly Lows

Lumber futures have rebounded to over $600 per thousand board feet, recovering from the annual low of $538 marked on May 6th. This uptick is attributed to the booming homebuilding activity across North America and ongoing supply constraints. In Canada, housing starts in April soared by 30% to reach 278,606 units, spurred by a remarkable 64% increase in multi-unit projects in Montréal. The United States also saw a rise, with starts climbing to an annualized rate of 1.361 million, largely due to an 11% boost in multi-family construction. However, sawmill output is still challenged by environmental restrictions, shutdowns from the pandemic, and persistent freight disruptions, as input costs continue to rise. The Producer Price Index for softwood lumber climbed 3% in April, and energy and transport surcharges remain high, causing inventory shortfalls at significant distribution centers. With building permits now favoring longer-term nonresidential projects and the peak construction season approaching in summer, dealers are aggressively replenishing their stocks. This leaves little room for immediate price relief in the lumber market.