US imports of lumber from Europe have risen this year so far, defying many analysts’ expectations for overseas supplies to decrease due to falling demand, weaker prices and the Russia-Ukraine conflict.
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Frame of Reference for Revamped Lumber Futures
Futures markets involve speculation about the future, spot markets deal with the present. They often differ from each other, but when the future finally arrives and the contracts near expiration, futures must converge with spot to function as a practical hedging tool. The legacy contract has done that.
FEA Improves Accuracy of European Import Data
Forest Economic Advisors has recalculated US lumber import data from Europe after discovering an industry-wide miscalculation. The difference is large—likely over 1 billion board feet (BBF) in 2022—and explains a discrepancy between end-use market activity and US consumption that had left us scratching our heads for some time now.
CME to Launch Truckload-Size Lumber Futures in August
CME Group Inc. plans to replace its lumber futures contract with a smaller version that will be deliverable to Chicago rather than Western Canada, following two volatile years that lifted prices to record highs. This new truckload-size contract will be a quarter the volume of the current lumber futures, and is designed to attract more buyers and sellers to the market. The new physically delivered futures and accompanying options contracts are set to launch Aug. 8, pending regulatory approval from Commodity Futures Trading Commission.
Lumber Quarterly Forecast
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The Difference Between Consumption and Apparent Consumption
There are several different ways to calculate consumption. Some calculate consumption as shipments plus imports minus exports. Others look at production plus imports minus exports. However, neither of these methods takes inventory swings into account.