Of course, no one knows where the market will go next. But traders participating in the CME lumber futures market are betting on higher prices in the months ahead.
As we noted a few weeks ago, the market for new home construction looks set for continued strength. This view is further reflected by the huge growth in new home orders reported by luxury homebuilder Toll Brothers last week.
Although February saw a surge in lumber prices to levels not seen since 2013, traders are pricing in even higher prices. At the time of writing this, the March 2017 contract was trading at $371.80, while May was trading at $384.00, and July at $390.00.
Anything can happen and brief pullbacks are to be expected. Waiting to time them, however, risks paying higher prices according to the futures market.
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