Member access

4-Traders Homepage  >  News

News

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesHot NewsMost Read NewsRecomm.Business LeadersVideosCalendar 

Backlog Puts the Wood to Lumber Prices

04/20/2014 | 08:55pm US/Eastern
By Kelsey Gee 

Lumber prices are near the lowest levels in seven months, after a cold, wet start to spring has delayed construction and kept potential buyers away from the housing market.

Now, market watchers are waiting for the inevitable spring thaw to shake loose lumber that has been building up in warehouses and at sawmills across North America, while searching for signs of demand from U.S. home builders.

"Last year everyone was irrationally exuberant about the spring and about how fast the housing recovery would take hold," said Steven Chercover, an analyst with D.A. Davidson, an investment-management firm in Portland, Ore. "This year, we were optimistic, but had the worst winter in decades" in parts of the Midwest and East Coast.

The winter halted construction and caused transportation bottlenecks, with heavy snows preventing trains and trucks from moving not only lumber but other commodities as well. As the snow melted, competition from grain and energy shippers left a lot of lumber stuck at mills and warehouses. That left the Canadian National Railway Co. to issue a rare embargo notice to wood and pulp producers in March to say it would stop moving lumber products until the backlog was cleared.

"Whenever the perception is out there that there's lumber piled up like there is now, the psychology feeds into a real bearish market," said Paul Harder, a lumber trader with Dakeryn Industries, a wholesale distributor in North Vancouver, British Columbia

Lumber traded on the CME fell to as low as $323.50 per 1,000 board feet last week, the lowest for any front-month contract since September and ended down 1.1% on the week.

Temperatures again dropped below during the week, with some states receiving snow, continuing to damp optimism about new construction and lumber.

Meanwhile, a spate of housing indicators that have shown a more-sluggish-than-expected appetite for building materials at the start of the year also has sent jitters through the market. The number of new homes under construction, known as housing starts, rose 2.8% in March to a seasonally adjusted annual pace of 946,000, according to the Commerce Department, below market expectations of 965,000.

Still, some analysts are confident the market will recover.

Daryl Swetlishoff, head of research at Raymond James in Vancouver, noted a strike by Canadian truckers has ended, easing another transportation chokepoint, and said he expects the North American market will absorb the lumber stockpiles.

"Wood is flying again, [and] demand should be healthy going forward," Mr. Swetlishoff said.

Write to Kelsey Gee at kelsey.gee@wsj.com

React to this article
Latest news
Date Title
07:43p Newcastle Announces Tax Treatment of 2014 Dividends
07:41p BANKS ISLAND GOLD : Releases Third Quarter Report
07:41p DLT SOLUTIONS : Continues Growth Path under New Ownership
07:40p Orca Engages Primoris Group as Investor Relations Consultant
07:40p SOLARCITY : A Toast to Solar-Powered Beer
07:37p ALIBABA : Robbins Geller Rudman & Dowd LLP : Files Class Action Suit Against Alibaba Group Holding Limited
07:36p PETROPAVLOVSK : $870 million to be invested in modernization of Kazakhstan airports
07:35p AFCON : Black Stars seek to atone for their Brazil sins
07:35p SIMCORP A/S : Share buyback program
07:31p RYAN & MANISKAS, LLP : Announces Investigation of Advanced Emissions Solutions, Inc.
Latest news
Advertisement
Hot News 
BANCO ESPIRITO SANTO : Drought woes spread to another Brazilian state
BERKELEY MINERAL RESOURCES : Obsidian IR
RAMBLER METALS & MINING : Implements Revised Plan at the Ming Copper-Gold Mine
NOSTRUM OIL & GAS : Fourth Quarter and Full Year 2014 Operational Update
GREEN DOT : reports 4Q loss
Most Read News
06:27p AT&T top buyer at U.S. airwaves auction; Dish spends big
06:13p INTEL : Tech Industry Leaders Are Beginning To Accept The Diversity Challenge; U.S. Law Partners Should Do The Same
06:37p BUSINESS MACHINES : IBM boss gets bonus despite company's woes
06:34p HONDA MOTOR : says fatal crash involved Takata air bag inflator rupture
06:06p ASHFORD HOSPITALITY : NYSE stocks posting largest volume increases
Most recommended articles
07:30pDJIPO Sizzles As Shake Shack Tests Big Chains
07:11pDJU.S. Economic Growth Slows to 2.6% in Final Months of 2014 -- 2nd Update
07:08p UK asset managers weak on disclosing environmental, social investing - survey
07:05pDJSavings at the Pump Are Staying in Wallets
06:59p EXCLUSIVE : Sysco, US Foods offer to divest 11 facilities to win FTC deal approval
Dynamic quotes  
ON
| OFF