Sky-High Lumber Prices to Drop by Year-End, Analyst Says
(Bloomberg) -- Lumber’s record-setting price rally could cool off by the end of the year.
Canadian pine beetles, home-hungry Americans and supply hiccups have all converged to drive the price of lumber through the roof, but it should fall back to about half of it’s current sky-high level, according to a note from Capital Economics Ltd commodities analyst Samuel Burman.
Lumber has nearly tripled since the beginning of last year, surging as high as $1,300 per 1,000 board feet. Burman expects it to plummet to $600 by year-end even as home-building and renovations keep demand elevated.
“Even though we expect lumber demand to hold up well for some time, we still think that a rebound in supply will lead to a sharp fall in the price of U.S. lumber over the next eighteen months,” Burman wrote.
Easing quarantine restrictions should bolster lumber mill capacity and the hiring of more truckers to mitigate logistical hurdles will help alleviate supply constraints. Meanwhile, the surging wood price tag is driving up home prices and sawmills are benefiting from a gaping difference between low-cost logs and finished lumber.
“All told, we forecast that the price of U.S. lumber will plummet to $600 and $550 per 1,000 broad feet by end-2021 and end-2022, respectively, as domestic supply surges and imports remain strong,” Burman wrote.
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