Our outlook for summer lumber prices has grown a bit brighter as it has become less likely the industry will severely out-produce demand. Historically, sustained strength in poplar demand would have long since triggered enough production to swamp markets and prices, but not this time.
Nor is the slowdown in summer shipments to Europe likely to have as large an impact as in the Hardwood Publishing offers Hardwood Review, Hardwood Leader, WoodLogics and other services for lumber buyers and sellers in the wood manufacturing industries past, with Asian markets seemingly capable of soaking up any excess…even of the upper grades.
If summer markets hold reasonably steady, it may be time to abandon some of our long-held assumptions about how the industry works and recognize that our smaller, leaner industry is less prone to the vicious boom-bust cycles of old. Yes, most lumber prices will plateau or soften this summer, but we don’t anticipate large price declines in any species, grade, or thickness.
Higher domestic demand is also contributing to our more optimistic outlook. Lumber consumption at flooring plants turned up even before housing starts did, and cabinet manufacturers are slowly ramping up production. Railroad tie and industrial lumber demand will remain wide open, even if supply lines get a little choked up in some areas. Finally, fuel prices are trending down, which should give the industry and the economy at least a feel-good boost through election time.