The Baltic Dry’s losing streak – now into its 28th day – is becoming old hat. But have you heard the one about the lumber futures?
As Bloomberg reported, lumber fell limit-down on the CME on Tuesday, “on declining construction in the U.S. and Canada and speculation that wood processors will not curb production, adding to already ample supplies”.
Translation: too much dead wood in the economy.
Here’s more from Bloomberg, emphasis ours:
Lumber futures for September delivery fell the limit of $10, or 4.6 percent, to $209.40 per 1,000 board feet in Chicago. Lumber has plunged 38 percent since its 12-month high on April 21 on sluggish demand for building materials.
Construction spending in the U.S. declined 0.2 percent to $841.9 billion in May, the first such drop in three months, as homebuilders cut back and work on commercial projects decreased, the Commerce Department said on July 1.
This is something of a reversal from April, when the FT reported lumber prices were ticking up due to supply cuts:
Lumber prices have raced to levels last seen at the tail end of the US housing boom, fuelled by supply cuts and a modest rebound in house construction.
CME May lumber futures on Tuesday touched $325.30 per 1,000 board feet, the highest level for a front-month contract since May 2006.
Retail lumber yards, starved of credit and lacking demand from builders, have kept inventories lean.
But then again, in March-April, US housing data were still looking hopeful. The picture currently painted by economic indicators is somewhat gloomier.
(H/T @CMEGroup)
Related links:
Lumber Prices Indicate Next Wave Down Underway – Nathan’s Economic Edge
Timber, but not as we know it – FT
Canada curbs lending to check housing boom – FT
Timber! – FT Alphaville (2009)