Timber Industry Report, Sept. 29
Interpretation and Looking Ahead.
The 2x4 lumber price has fallen back from its high of $315 last month, to $305. This is the first fall in the stud price since a steady rise started at $242 per thousand board feet (MBF) in January.
Log prices remain within a $15 price range of $676-$691/MBF since January. Usually the price is more volatile. Housing starts actually lost a little ground, building permits remained steady, and the inventory of unsold homes remains tight. Random Lengths reports that we are in a waiting game with millennials on home purchases. Random Lengths also reports a shortage of urban lots for building and construction labor. These issues may improve over a period of a few years, but not months.
The 30-year fixed rate mortgage value has stayed below 3.5 percent since the beginning of July, an unprecedented low rate. The mortgage rate of 3.42 for the week of Sept. 29 is flirting with the 40-year low of 3.41 on July 7.
The other important story is the lumber trade dispute between Canada and the United States, as discussed last month. This dispute really heats up when the exchange rate drifts further from historic near parity.
Currently there are $1.31 Canadian per U.S. dollar, same as last month. That makes it expensive for Americans to travel to Canada. And it makes Canadian mills very happy to sell lumber in the U.S. Symptomatic of the dispute, American data reports 37 percent Canadian imports while Canadian data reports 23 percent exports to the U.S. in the same 1-year time period, according to Random Lengths. Intensive negotiations are continuing, but unless a settlement is reached, a lawsuit over unfair trade practices could be filed as early as Oct. 13, two weeks from now. Stay tuned.