The price of US lumber futures has pulled back since it peaked at $1,700 per thousand board feet in late May, falling roughly 43% as of mid-June.
The red-hot commodity has been on a rapid decline the past few days, although prices remain elevated, up by 139% over the last year, making it one of the best-performing commodities in that period. Cash lumber prices are also tumbling.
Experts, such as Drew Horter, president and CIO of Tactical Fund Advisors, welcomed the downturn. He said lumber may tumble to $600 per thousand board feet in the next six months.
“You can’t keep building at this pace,” he said. “There is also a domino effect to a certain extent.”
Chip Setzer, director of trading and growth for Mickey Group, a commodity trading platform, agreed. He said $600 is likely a fair valuation. In fact, he doesn’t believe that lumber’s price should return to its pre-pandemic level.
“Everybody kind of wins if we stay in that range,” he said, adding that lumber’s price can even go as high as $900. “I think that is a range for a very sustainable and healthy construction market, producing lumber market, exporting market. You kind of want all those things in harmony.”
Setzer, who has been in the lumber industry for 12 years, said this will give sawmill operators, truck drivers, and other players in the industry more cushion for capital upgrades and operational improvements.
Among the drivers of the…