17 Questions for 2017

Here are 17 questions that Harderblog will be watching in 2017, in search of answers:

  1. (See Question #1 from last year)
  2. Will Trump really build a wall and have Mexico pay for it?
  3. Will the softwood lumber dispute have found a satisfactory resolution?
  4. Will anticipated countervailing duties on Canadian softwood lumber shipments to the US be applied retroactively?
  5. Will Trump really pull the US out of the Paris Climate Change Agreement?
  6. In the face of “Fake News” and misinformation that poses distraction to sound decision formulation on many fronts, will lumber dealers lean more heavily than ever on trusted wholesale relationships to interpret market changes?
  7. Will Trump really pull the US out of the Iran Nuclear Deal?
  8. Will there be 100 million consumers shopping in augmented reality (AR) by the end of 2017?
  9. Will a measure of sanity return to the Vancouver housing market?
  10. Will the record number of homeless people identified in the City of Vancouver’s 2016 Homeless Count be broken again in 2017?
  11. Will tensions with China escalate over trade and Taiwan?
  12. In light of increased hacking of connected products, will questions surrounding cyber security have become a make-or-break issue by the end of 2017?
  13. Is there any indication that by the end of 2017 a future of driverless transport trucks could promise enhanced just-in-time lumber deliveries?
  14. Will anybody care if the Vancouver Canucks fail to make the Stanley Cup Playoffs?
  15. Will BC Premier Christy Clark’s Liberal Party secure a fifth term in May?
  16. Will the global crises surrounding issues of displaced peoples/refugees have eased anywhere?
  17. Will general predictions forecasting a “bumpy ride” for 2017 come to fruition?

 

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Ringing the Bells

The ringing of bells at this time of year signals news on different fronts – as in heralding the Advent Season – or, marking the close of another trading day. Both bring news and welcome respite.

In recent months we’ve probably all felt like midwives to an age that’s giving birth to the post-industrial society. In experiencing the tightening grip of hands, there is a sense that someone should be calling for a doctor in the house.

We are mindful that in reporting on this atmosphere we are helping to shape it. Although acknowledging risks peculiar to the time, there is a sense of opportunity and responsibility to share in a vision for the future. It includes looking beyond early vibrations of the historic free trade agreement with the US. That picture anticipates greater stability in the 90’s – where some economic units will learn to survive without growth at the same time as others seek economies of scale cost advantages through consolidation. It suggests our function will expand to interpreting forces beyond supply and demand. Attitudes will reflect sensitivity to shaping quality of life for future generations. Already a new awareness of the fragile nature of international interdependence is evident amid the unpredictability of financial markets and lumber markets globally.

Into this reality the essence of Christmas comes with timeliness this year. It seeks the good in humanity while promising hope and restoration for the soul. It celebrates childhood joys and speaks of innocence that would believe in “Peace on earth and Goodwill to all”.

– Ernie Harder, Dec. 1987

 

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Vancouver (Dec. 9, 2016)

Q&A – Final Five for 2016

Answers to the five remaining questions from the Harderblog Top Ten Questions for 2016:

6. Is oil in the $20’s an inevitable reality?
No. In early January, crude prices had plunged to $34 in the face of oversupply, a level not seen since the early 2000s. But that would turn out to be the low for the year. Most recently, a curtailment deal between OPEC and rival producers was expected to further tighten supply in midst of growing demand.

7. How low can the loonie go?
The low of the year was January 20, when one Canadian Dollar was worth 0.6854 US Dollar.

8. Where will Conifex stock be priced in 12 months?
See TSE:CFF. Conifex Timber Inc. has risen over 30% since December 31, 2015.

9. Is this the year 3-D printers stationed in Fraser Lake begin mass production of 2×10-14’s and 16’s?
While there is little evidence of 3-D printers mass producing 2×10-14’s & 16’s at Fraser Lake this year, there is evidence that technological developments in production of new wood products are making a profound impact on many fronts. The opportunity to spend an afternoon touring the 18-storey mass timber hybrid structure pictured below at UBC was one of the highlights of the year. See High on Wood.

10. Will the Chicago Mercantile Exchange implement circuit-breakers to tame volatility in the lumber futures market?
According to reports that regularly publish updates on lumber futures activity, it’s generally acknowledged that what happens in the lumber market is a microcosm for the entire commodities asset class. However the factors behind volatile changes are felt much more acutely in lumber, than, say, crude oil, because the market/volume is so small. This week we posed Question #10 to Stinson Dean, Broker & Risk Manager at Tall Tree Lumber Company, who confirms volume/open interest is especially low in lumber right now. “Below 4,000 open contracts is very low. Lumber used to have 10,000 in open interest back in 2012-13. When there are limited participants, there are limited sell orders and buy orders. When bullish news is announced, there aren’t enough sellers in the market to absorb an influx of buyers and we get locked limit-up. Buyers are forced to go higher and higher to find sellers.” He adds, “Random Lengths noted that 2014 was one of the least volatile years on record. That’s been followed by two very volatile years. The difference between 2014 and the two most recent years is non-commercial speculator participation. 2014 was a trendless year, 2015 was a bear trend, and 2016 was a bull trend. Funds, in particular, love trends. ‘The trend is your friend’. So, when that group recognizes a trend, they start to pile on. And that starts a chain reaction.” According to Stinson, the funds are out of the market right now; it’s anticipated they will step back in long in the new year.

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Q&A – 2016 Edition

Of the Top Ten Questions for 2016 posed at Harderblog one year ago, the first five have been satisfactorily answered for us:

1. Will the Trump presidential campaign have staying power beyond March?
See November election results.

2. Will the US make history by electing a woman as president for the first time?
No.

3. Will BC softwood log exports to Mainland China eclipse BC softwood lumber exports?
For the answer to this question, we turned to Russ Taylor, President, WOOD MARKETS. “Interesting question, but lumber export volumes to China have always been much higher than logs. The gap is narrowing, but lumber export volumes are still much higher.” Russ confirms BC softwood exports to China through October as follows: Logs = 3.0 million m3 vs 2.43 million m3 in 2015 (+23%); Lumber = 5.0 million m3 vs 5.49 million m3 in 2015 (-9%). Of course, log exports even south of the border continue to be a contentious issue.

exports

4. Will a new Softwood Lumber Agreement be reached between Canada and the United States before the standstill period ends October 13?
No. By early October, we were told talks had entered the days of magical thinking. And while the US Lumber Coalition’s submission of their petition to the US Department of Commerce was predictable, the November 25 timing caught markets by surprise. At least one forest analyst suggested “it put a whole new spin on Black Friday.”

5. Is this the year virtual reality goes mainstream?
As the cost of development falls, we’re told virtual reality is in fact beginning to move into the mainstream. However, it’s reported that most console headsets are still “device-exclusive”. And flaws in these controllers actually tempered demand in 2016, leading Tech Digest to ask will virtual reality finally become mainstream in 2017?

Christmas Tree Talk

It used to be that if you were a young fir seedling on this continent, and assuming you took care to grow hard, you might have a fighting chance one day to find yourself selected as a Christmas Tree. Not so much anymore. Odds are an artificial tree from China has taken away that opportunity. Even so, it’s a season of hope in these times of change.

In fact the Canadian Christmas Tree Association reminded us that we just celebrated National Christmas Tree Day on Saturday, December 3rd.  With 69,968 Canadian acres of Christmas tree production underfoot, the good news is that one acre of Christmas trees produces enough oxygen for 18 people. On the face of things, it might not seem significant. But globally, it’s big business. In the US, the 30 million real Christmas trees sold each year represents about one tree for every three of the eligible US voters who didn’t vote in the recent presidential election.

Annual artificial Christmas tree sales are now in excess of one billion dollars. Balsam Hill is the largest seller of artificial trees, all featuring “stunning realism”. Their website shares testimonials boasting that “things that are tangible, like farm-grown trees” may have lost some of their allure. Fake is more acceptable. In recent polling – even as polling may have lost some credibility in recent times – the US National Christmas Tree Association trade group for tree growers claims that “young adults choose a fresh tree each year at a higher rate than the overall population.”

We’re told that three times more homes will display artificial trees than real trees this year. In Canada, it’s reported we’re even beginning to install artificial trees in provincial parks. But hey, in this age of technology our concept of reality is shifting. It’s all about perception. Ersatz is in. “We live in the social media era,” explains a spokesperson from Ontario’s Ministry of Natural Resources. “We need to make sure photos posted online of our parks look amazing.”

China is a key player in the plastic tree trend. Most artificial Christmas trees are made from PVC plastic, described as fire retardant but not fire-resistant. Fully 80 per cent of artificial trees worldwide are manufactured in China. China, despite its 1.375 billion people, is not a big market for Christmas trees.

Not surprisingly the concerns long ago voiced by “The Littlest Christmas Tree” story of childhood folklore are as real as ever in its challenge to be noticed.

The bottom line is that neither tree (real or fake) has a significant impact on the environment. If you want to lessen your impact on the environment, don’t drive.
– Jami Warner, American Christmas Tree Association (ACTA)