Market Overview: Lumber (LB)

The bulk of lumber produced in the United States comes from the Oregon, Washington and Northern California area. Douglas Fir is the tree of choice when referring to lumber. It is used primarily in the construction of new homes across the country. A thinly traded market add lumber into portfolios in moderation.

Seasonal Overview:

Demand for lumber is heavily influenced by housing starts, interest rates and weather. The effect of weather is not based on the growth of the trees but rather on the efficiency of logging the trees and the building of homes. Nice weather makes it easier to both log the lumber and use it in the building process.

Lumber has a cyclical nature as it hits price lows at the end of the harvest season. Inventories are highest at the sawmills at that time resulting in an increased supply and low price levels. Price levels are typically at their highest levels in spring, as the home building season gets under way.


Lumber (CME): (High: Feb-Mar//Low: Sep-Oct) Market rises into winter with log decks low, weather slowing timber harvest, and large developers/wholesalers building inventory for next construction season. Feb-Mar peak precedes consumption. Demand declines sharply after final spurt of buying in early September, but log decks are depleted. "Long by Halloween, out by Valentine's Day."

Chart courtesy of Moore Research Center, Inc.