Will the U.S. Lumber Rally Resume?

 

Despite some anxiety whether current price levels could hold, and even calls by some that a lumber price “crash” was imminent, the U.S. lumber futures market is demonstrating resilience this week, with a successful hold of a key mid-$350 support level, and a bullish daily move on a day the Fed confirmed an interest rate hike.

On Monday, the May contract backtested support at $356.90 and bounced. Wednesday’s move is noteworthy in that the price opened at $360.10 and closed 1.67% higher at $365.50 on a day where the Fed raised interested rates. Rising interest rates are generally considered to be a negative for lumber prices, but the strength of the lumber market shows this doesn’t have to be the case.

Will the U.S. lumber rally resume? Our view is that yes, both the near-term and long-term look positive for the U.S. lumber market. Adding fuel to the fire of our previous position, that the U.S. lumber market is set for continued growth, the most recent home builder index jumped six points to 71 – it’s highest level in 12 years.

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