Lumber prices hovered around the $550 per thousand feet benchmark amid prospects of increased supply and subdued demand. The latest data from top producer Canada showed that lumber production edged down by 0.1% month-over-month in November but rose by 2.4% on an annual basis, indicating a resilient upward trend in the sector over the longer term. Meanwhile, the US housing starts, which serve as a measure for demand, have plummeted by 14.8% mom to an annualized 1.33 million in January 2024, marking the largest contraction since April 2020 and missing market forecasts. On the monetary policy front, several Fed officials stated the interest rate cuts could come later than anticipated amid lingering price risks and tight labour market.
Lumber is wood that has been processed into beams and plank. The biggest producers of lumber are concentrated in the Baltic Sea region and North America. The futures contract traded on Chicago Mercantile Exchange specifies that the lumber must be manufactured in certain U.S. states and Canadian provinces.