On February 6, Bloomberg reported that lumber futures for March delivery rose 2.2 percent to $387.40 per 1,000 board feet in Chicago, after reaching $389 earlier, the highest level for a most-active contract since December 28. In addition, prices have climbed 13 percent in the last six sessions on the Chicago Board of Trade, following the 44 percent increase observed in 2012.
The most commonly cited reason for the lumber price rally is the recovery in US housing. Bloomberg quoted Lars-Goran Olsson, president of Woodstat, a Swedish forestry analysis company, as noting that there has been a strong increase in US construction and Canadian shipping volumes to China, as well as problems in raw material supplies, particularly in British Columbia. “Altogether if we are looking forward, the market for softwood lumber is going to be stronger and stronger.”
The New Zealand forestry news website Friday Offcuts reported at the end of January that rising prices in North America were likely to lift lumber product prices in Japan and China, which could provide export opportunities for Russian, European and Southern Hemisphere producers. This is likely to provide benefits for forestry investment enterprises in those regions.
The report predicts two distinct price spikes, the first being driven by demand increasing faster than supply through 2013 and 2014 and the second, described as “a true lumber super-cycle”, being seen in 2016 and 2017. This on account of continued demand growth in the US and Asia, together with European economic recovery and maxed-out production in Canada, all resulting in a new supply-demand imbalance. Viewed in this light, a favourable environment is forecast for forestry investment enterprises which have placed themselves well to cater for the demand.