Lumber prices have now fallen 30% since the start of March as rising inflation curbs demand for
home construction and renovation projects.
Lumber futures fell as much as 8.4% to $870 U.S. per 1,000 board feet in Chicago trading
yesterday (April 11), bringing the slump since the start of March to 30%. The contract, which
briefly slipped below $850 U.S. last week, is now hovering at levels seen last December.
The home renovation sector is the largest lumber market segment, accounting for about 40% of
consumption. Big box retailers such as Home Depot (HD) represent half of the segment, with
the rest coming from smaller retailers and contractor yards.
Home construction and renovation projects often provide a springtime boost to North American
wood prices, such as last May when lumber hit record highs during a homebuilding boom before
collapsing as high prices stifled demand and sawmills ramped up production.
Lumber prices have been volatile throughout the pandemic, with a recent peak in March fueled
by lingering supply and shipment woes from last year’s floods in British Columbia.
Inventory is also piling up because of transportation snarls that have left many of North
America’s biggest producers with stockpiles at sawmills. The backlog is especially acute in
Western Canada, with some lumber companies responding by cutting back on operations.
Canfor (CFP) cut operating schedules at its sawmills in British Columbia starting on April 4 to
address what the company called “unsustainable inventory levels.” West Fraser Timber (WFG),
the world’s largest lumber producer, curtailed output in early February.
