Lumber Futures Extend Record Rally as Sawmills Race to Keep Up

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Lumber Futures Extend Record Rally as Sawmills Race to Keep Up

Marcy Nicholson
·1 min read

(Bloomberg) -- Lumber prices in Chicago extended a record rally on Friday as sawmills struggle to increase their inventories to meet insatiable home-building demand.

Prices have quadrupled in the past year, buoyed by an unexpected surge in home building and renovations that caught sawmills off guard with low inventories. Demand has held strong since mid-June, keeping inventories low and costs high. That’s expected to have spurred record earnings for some lumber producers while adding more fuel to surging house prices.

Builders are scrambling to buy the wood products that they need, and paying increasingly high prices that they must pass along to home buyers as North America heads into its peak building season. The lumber rally has lifted the price of an average new single-family home by $35,872, according to the National Association of Home Builders.

Resolute Forest Products Inc. said Thursday it restarted a mill in Ontario that had been idle for two years, as well as one in Arkansas, and was running two shifts to keep up with demand.

Lumber futures for July delivery jumped by the exchange maximum $48, or 3.6%, to a fresh record high for the most-active contract of $1,376.50 per 1,000 board-feet on the Chicago Mercantile Exchange.

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