On July 22nd, Sober Look noted how back in the spring of this year, the large decline in lumber futures preceded weaker than expected U.S. residential construction activity in June. With lumber as a leading indicator in mind, their post here asked if the steady increase in lumber prices in July suggested a boost in building. Based largely on the Homebuilders’ survey (highest levels since 2006), they concluded “many economists think so”.
So, is construction picking up steam in the U.S.? I posed that question yesterday to Mark Kennedy, Executive Director, CIBC Forest Products Equity Research. “The lumber stocks say yes (West Fraser, Canfor, Interfor – all near their 52 week highs), but someone forgot to tell the futures market!” said Mark, pointing to the recent pullback with prices in most contracts hitting four-week lows Monday. Traders will certainly be tuned to the data: seasonally adjusted annual housing starts and permits for July will be released August 16th.
It was winter 2000. Bob Leffler and I were safely through security into the departure lounge at YVR for an early morning flight to Boston, and the Northeastern Retail Lumber Association’s Lumber and Building Material Expo. We were at ease over a raft of outstanding quotations against hard-won inquiries that seemingly posed little risk in a market that lay dormant. That is, until Bob’s cell phone suddenly came alive. Overnight lumber markets had caught on fire! The deftness with which Bob escaped incoming P.O.’s – unscathed from dangers posed by outstanding quotes – was a thing of beauty. In the process, all customer relationships were preserved with integrity. The essence of timing as a factor in such things is something any lumber trader can appreciate. Threats and anxieties diffused, we laughed about it at 32,000 ft over spicy Caesars. I had attended “The Boston Show” several times before and would go several more times in the years that followed. But this trip is the one I’ll always remember. Bob got his start in the business at his dad’s lumber yard in Vancouver, Leonard Building Supplies. In 1972 he joined Pacific Overland Timber, where he worked under mentors George Cruickshank and Len Mayes, before joining Taiga in 1974. After 39 years, many of those as an influential supplier to the Northeast market, Bob announced his retirement this week, effective September 30th.
“Don’t look back.. you’re not going that way.”