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.
Compilation: Wood Markets Monthly articles by Robert Fouquet, FEA Partner and expert on new wood product technologies
COMPILATION: Wood Markets Monthly articles by Ernesto Wagner, FEA Partner and South America expert
A huge number of homes slated for construction in the US this year are still waiting to be built or completed as a chronic labor shortage, tight supplies, and steep inflation wallop homebuilders’ confidence. This comes on the heels of the industry’s rockstar performance in 2021 following a surge in pandemic-induced homebuilding demand that took the industry by surprise.
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.
Sanctions on Russia, including the ban on using the SWIFT money transfer system, will severely limit its ability to participate in international trade, but the impacts to its softwood log and lumber trade are likely to be less affected than other industries.
Over half of Russia’s softwood lumber trade and three-quarters of its softwood log trade is with China (graphs below). China has not imposed sanctions on Russia and has payment systems independent from the SWIFT system. Only ocean shipments from St. Petersburg, which account for around 25% of China’s total volume from Russia, are traded with letters of credit based in US dollars. Some contracts have already been changed to Chinese RMB payments, however trade from Northwest Russia is likely to suffer some in the coming months.
Over the 15 months—since North America’s economies hit their pandemic-induced bottoms—much discussion in the wood products industry has centred on access to employees. Producers of solid wood products were particularly challenged to meet the demand from builders and DIYers, resulting in record-high prices for finished goods. Of course, 2020 was not just the year of the pandemic: It also saw a record number of hurricanes in the South, record fires in the West, and social unrest nationwide. What a year!
Over the past year—a large portion of which was impacted by the coronavirus—much discussion in the wood products industry has centred on access to employees. While many wood products prices soared to new highs amid solid housing starts and strong residential improvement spending, producers were challenged to meet demand from builders and DIYers. During this period of high demand and high prices for finished goods, timber prices and production levels were largely unaffected. Of course, 2020 was not just the year of the pandemic: it also saw an unprecedented number of hurricanes in the South, record fires in the West, and social unrest nationwide. What a year!
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