Lumber is back.
One of the first commodities to crack this year was lumber and bears used that as a signal that broad commodities were about to roll over. It hasn't turned out that way.
Lumber is back into four-digit territory, near $1000. It's more than doubled from the August lows and, notably, the August lows were in the range of the high water mark or previous years.
As for lumber market specifics, the floods in BC and new policies there have caused some issues but that's a bit beyond me. The demand side is what matters in the global macro picture and yesterday's housing starts were at 1.679m compared to 1.565m expected. Realtors and home builders are pointing to increasing activity as buyers accept the higher price paradigm.
This week Lennar, which is the 2nd largest US home builder, pointed to strength across the country and ongoing supply shortages after a decade of under building. They expect to build 12% more houses in 2022 than 2021.
As for lumber pricing, notice how the uptick is coming at the same time as last year.
Aside from the broad commodities trade, higher prices are also good for Canada's terms of trade and the loonie.