Sound of Music

Any good wood-related story is music to a lumberman’s ears – even if it’s about very old, recycled lumber. Such is this film clip of Kelly Guitars that caught our eye, and ear, with details of the creation of guitars fashioned from recycled, air-dried timber. Their “Bowery Guitars” are built from old-growth, white pine timbers barged down the Hudson River 200 years ago from the great virgin forests of the Adirondacks in upstate New York. It’s a story about reclaimed lumber from New York City buildings framed in the 1800’s, now enjoying an amazing afterlife of perfection and harmony as a solid wood Kelly Guitar.

Getting Burned

The news this week is all about getting burned. In B.C. we’re told that forests ravaged by fire this year are already nearly triple the 10-year average, with costs of fighting them expected to soar to $400 million. With newly-imposed water restrictions, Vancouver lawns display shades of burned brown. On normally lush Fraser Valley farms, the hot weather is scorching crops, leaving one visiting trucker to off-load surplus blueberries on our trading floor this week. Somehow the perceived hardships resulting from rules against washing your car in Vancouver pale in relation to wildfires causing families to be burned out of Interior homes.

There are other reports of getting burned in the news today. The summer sun has reportedly brought out a new trend where Darwin award candidates are using sunscreen to draw designs on their bodies. The bright idea is to get a severe sunburn so that the design created by the sun is visible. Meanwhile gold investors’ portfolios are getting burned rather than burnished. And there are other burning issues today besides Canadian lumber stocks. Today’s column by Barbara Yaffe in The Vancouver Sun reports that homebuyers risk getting burned by home inspections because there is a lack of independence between the home inspection industry and realtors. Do the bulldozers really care?

In the wider world there is more talk around the nuclear deal with Iran as Congress prepares to debate the issue over whether it’s a good deal or a bad deal in which some suggest the West and Israel will surely “get burned”. This week came news of hackers accessing a website teed up to facilitate philanderers. Playing in those websites is said to hold risks of getting burned. Some might say this alludes to the kind of burning ring of fire that Johnny Cash used to sing about.

Some might question just what does all this have to do with the price of 2×4’s? But in conclusion, a lumber trader was heard to say that even amid reports Americans bought homes in June at the fastest rate in over eight years, there is risk of getting burned in the cumulative build-up of excessive household debt in Canada. But for some lumber traders, it was Starbucks recall of tea pitchers that really caught our eye, after some customers were cut and burned by breaking/leaking glass. We depend on that stop each morning to offer up encouragement for the day – to be rendered risk-free of getting burned – if you don’t count the price paid in depleted loonies.

softwood lumber dispute

Getting Started on Housing Starts

Since when does data on building chicken barns legitimately become part of housing starts analysis? In today’s Lumber Market Report, Random Lengths drew attention to what seemed like an unusual point in noting that “4×6-12’s on the westside got a boost from strong sales to builders of chicken houses”. Perhaps it doesn’t matter. Certainly the roosters don’t care. So why should we?

There’s interesting stuff happening in housing construction in many areas that makes one wonder about the collection of data on starts. For one, does size matter? As part of Vancouver’s Eco Density Initiative, Laneway Infill Housing aims to increase density without disrupting neighborhood building patterns. No doubt the building materials used in construction of one of Vancouver’s many new monster homes is equivalent to five or six laneway houses or two dozen chicken houses. This morning The Vancouver Sun reports Hummingbird Micro Homes selling up to 31 housing starts at 300 square feet per home. Are these houses included?

The multi-family trends in ‘housing construction’ south of the border no doubt influence degree to which particular starts impact use of lumber, as traders warily scrutinize activity for June. Meanwhile, a recent string of local articles bemoan the sluggish lumber recovery in B.C. It has some wondering if it’s time industry focused a little less on what we can’t control (housing starts) and a little more on what we can (lumber production).


Empowered Buyers

A recent article drawing attention to what the writer describes as a need for sellers to be leaders in assisting buyers in the purchasing decision caught my eye. Consultant Deb Calvert suggests that sellers have a significant role to play in the purchasing decision. The tone of her article might even lend imaginary enhanced importance to any lumber trader’s role in the sales/purchase transaction when she indicates “we need sellers to inspire us as buyers, guide us and be a resource in facilitating a sale that will benefit us.” All of this is probably true. However, any article on salesmanship probably needs to recognize and differentiate between the marketing of industrial and consumer products. As pointed out here, “consumer marketing presupposes powerful sellers and passive, inexperienced buyers who can be influenced to purchase by a variety of advertising techniques”. In contrast, industrial markets – i.e. lumber buyers – consist of very knowledgeable buyers and buyer teams/buying groups/cooperatives.

It’s certainly true that the relationships developed between lumber buyers and sellers over time play a significant role in building trust and confidence in sales/purchase decisions. It’s evident that complexities of so many global variables shaping our domestic markets these days lend credence to the suggestion that purchasing managers or agents value trusted professional salesmanship to collaborate in interpreting market changes, empowering buyers.

“You can’t build a reputation on what you are going to do.”
– Henry Ford

Summer Smoke

We might have been hoping that summer lumber markets would be smoking by now. But the smoke that’s been hanging around Metro Vancouver is not what anyone expected. When folks at Whistler this week compare air intake to atmospheric conditions in Beijing, it’s serious. What’s shaping up to be the worst wildfire season on record in many parts of western Canada could significantly impact seasonal activity in the woods yet to be determined. But foreseeing the impact of the many variables at play in shaping this summer’s lumber markets is being clouded by more than the smoke and mirrors that might normally have a role in market forecasts.

In the face of China’s plunging financial markets comes reports of their oversupplied lumber inventories. At the same time, hand-to-mouth buying patterns evident in North American markets suggest lingering effects and challenges in playing catch-up after an unusually harsh winter. Meanwhile attractive exchange rates are offset by a 15% export charge on B.C. softwood shipments south of the border in July; questions abound over the impact of a 5% export charge for August. Speaking of the Softwood Lumber Agreement, traders also eye the October expiration date and what’s anticipated to be a one-year, cross-border fibre free-for-all.

There’s also talk of federal elections in Canada on the horizon at the same time as more economic analysts suggest we could be teetering toward recession. Will the Bank of Canada cut rates yet again one week from today? Bulldozers in neighbourhoods across the Lower Mainland can’t wait. Hardly noticed in the mix of news are “secret” reports that free trade of B.C. logs is reportedly the “preferred policy from a global perspective”. Imagine that. Despite the saying that “a summer’s sun is worth the having”, too much of it carries risks of its own – beyond smoke in our eyes.

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“Smoky Sundown” – Stanley Park (7 July 2015)

On Fire

It felt like there was a lot of Vancouver on fire this weekend. We can’t be sure if it was the more than 170 wildfires burning across B.C. or if it was the United States women’s national soccer team smoking Japan that created an unbelievable atmosphere around the city. Meanwhile it was thought that lumber futures might have caught a spark this morning, but so far there’s mostly smoke with little evidence of fire.

The images below are from yesterday’s most-watched soccer game in U.S. TV history, where seemingly 50,000 of the 53,341 in attendance were wearing red, white and blue.

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