Forecasts, Forecasts

Lumber prices climbed 37% this year and lumber futures reached a seven-year high earlier this month. So where to from here? The New Year is set to accommodate a diversity of market predictions and forecasts. A variance of opinion is emerging, including this contrarian view at Bloomberg which offsets many of the bullish headlines of late.

When demand for lumber increases, prices move up. When production ramps up, the supply/demand balance swings the other way and prices come off. Nothing magical in that. However, there are more markets in play now than ever before. Offshore markets make the equation more complex. Evidence points to a U.S. housing market in recovery mode. The implication of available fibre supply is a question that will not be immediately answered.  Some sources indicate that if the ratio of salvaged MPB kill (dry) timber to green in the Interior was roughly 70/30 this year, 60/40 is estimated for 2013.

Whether bullish or bearish, all the market forecasts would suggest that good risk management guidelines will need to be followed in 2013. Happy New Year!

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