SEATTLE (Scrap Monster): The lumber futures posted their biggest-ever weekly decline, continuing its fall from all-time records touched in May this year. The prices have now dropped by almost 40% from its peak over the previous weeks. The Chicago lumber futures prices witnessed a decline by 18% over the week.
The U.S. lumber producers have reportedly ramped up production in response to the rallying lumber prices until May this year. The output, which has surged higher by 5% over the year, is expected to increase by another 5%. The period saw investments by lumber majors, including RFP, West Fraser and Canfor Corp., aimed at boosting their capacities to catch up with rising demand.
As per market experts the pullback in lumber prices is only a temporary phenomenon. BMO Capital Markets stated that the prices are unlikely to return to pre-pandemic levels any time soon. On the contrary, the robust demand situation coupled with limited mill supply signals above-trend prices at least for the next one to two years. Meantime, Domain Timber Advisors is of the view that the prices are expected to remain above $500 per thousand board feet for the next 5 to 8 years, aided by strong demand from U.S. housing market.
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