Opinion Independent Reports Lumber futures soar as U.S. govt. business...

Lumber futures soar as U.S. govt. business resumes

Keta Kosman, Madison's Lumber Reporter

0 Comments| October 20, 2013

The announced resumption of US government business late Wednesday, upon an agreement being reached between the House and the Senate, sent lumber futures on the Chicago Mercantile Exchange soaring Thursday, writes Keta Kosman in Madison’s Lumber Reporter https://madisonsreport.com.

This boost in activity also spurred lumber commodity sales with enough gusto to allow producers to push prices up slightly.

Benchmark WSPF KD 2x4 #2&Btr popped $4, or 1.1 per cent, to US$362 mfbm as demand from US customers continued strong due to good weather across most of the continent. Large bulk ordering from China also maintained momentum noted in the past few weeks.

Prices for western 2x4s are now $60, or 16.6 per cent, higher than this time last year, when that commodity was selling for US$302 mfbm. Lumber industry players echoed Madison's own sentiment in noting "the eerie resemblance of this October to the same month last year, only this year prices are higher."

Encouraged by recent good sales and taking into consideration order files at most producers of between one and three weeks, several sawmills are deliberately increasing production of the very scarce wider dimensions on the expectation of being able to sell out that newly-milled inventory before the end of this year.

After several weeks of price fluctuations, as producers and secondary suppliers tried to find equitable floor levels, panel product prices -- notably OSB and plywood -- remained flat this week.

In an ominous sign, labour talks between the Teamsters Union and Canadian National Railway Co. (TSX: T.CNR, Stock Forum) stalled Monday. The sticking point seems to be safety issues.

Most Canadian forest products companies are wholly served by CN or Canadian Pacific Railway Ltd. (TSX: T.CP, Stock Forum), so any interruption in service from one of these carriers would provide upheaval during this fragile, burgeoning recovery. Sawmill operators relying on the CN include: Tembec Inc. (TSX: T.TMB, Stock Forum), Canfor Pulp Products Inc. (TSX: T.CFX, Stock Forum), West Fraser Timber Co. Ltd. (TSX: T.WFT, Stock Forum), and Daishowa-Marubeni.