Policy, Projections, and a Pool

As we approach the middle of July, the week comes to an end with continuing uncertainties surrounding mill pricing policies for August shipments. For the first time this year, there will be an export charge (effective August 1st) on Canadian softwood lumber shipments to the United States. With that in mind, the uptick in market activity of late is certainly being tempered by heightened trader caution in anticipation of a duty discount for Canada vs. higher mill nets available offshore. Meanwhile, with nary a mention of pending export charges, nevermind the epic Q2 lumber and panel market implosion, the reported macro picture remains bullish as ever. Bloomberg explains here that lumber futures have rallied to a seven-week high on speculation that North American mills are slowing output as demand increases from homebuilders in the U.S. and China. Daryl Swetlishoff tells us here in The Financial Post “The U.S. housing market continues to improve, we reiterate our expectation of a lumber price trend of higher highs and higher lows punctuated by periods of volatility, as has been the case thus far in 2013.” He adds that even conservative forecasts for U.S. housing activity in 2014 point to higher lumber prices. Mark Kennedy at CIBC notes takeaway in the U.S. market continues to improve, “particularly in northern states where wet weather has been holding building activity back.” And while WSPF prices are presently $310/M, Mark continues to carry an expected $350/M average lumber price for Q3, acknowledging these expectations may be $10-20 too high. “We will see how the balance of July pricing evolves before adjusting our estimates,” says Mark in his preliminary Q2 report released today.
With the August export charge looming, one thing’s for certain; confusion ‘on the ground’ will continue. Don’t turn that channel?!

~Sawdust~

We took our little ones to beautiful Kits pool Wednesday late in the afternoon for a fun time of swimming. When we were back in the car to go home, my three-year-old Lauren was not too pleased about leaving the pool, complaining a bit.. a few tears.. before recomposing herself and asking from the car seat in the back: “Daddy, when I grow up, will I still be a girl?” I guess in this modern era I could have responded with “If you want to.. ?”

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