- Will any updated data surface to corroborate our recent polling that 99.3% of lumber traders have no idea what you’re talking about when you mention culture wars?
- Will a rebounding ‘covid-reopened’ China account for two-thirds of global growth in 2023?
- Will Russia’s behavior as a rogue state be the greatest global risk this year?
- In consideration of what some analysts call BC forest industry overreach, will 2023 be considered a “tipping point” in context of a fiber supply crisis?
- Will wood pellets still be considered “sustainable biomass” by the end of 2023?
- Will global catastrophic weather-related events trigger a heightened sense of urgency around action on the climate emergency?
- What sporting event will deliver up the greatest upset in result this year?
- Will the rise in eco-friendly materials in construction find new relevance and impact in the lumber industry?
- Will AI find newly-perceived value in construction in ways that impact the lumber industry?
- Will advancements in robotics find surprise new application for lumber trading floors in search of stepped up efficiencies and motivational strategies in enhancing customer services?
- Euro softwood lumber export volumes to the US accelerated last year, while BC exports to the US declined (CIBC Capital Markets 9 Jan. 2023). Will this trend continue in 2023?
- Will we experience a recession in 2023?
- Will there be a dramatic new breakthrough in the medical field that captures more attention than NASA’s planned space missions?
- Will new polling reveal that people are becoming bored of raging on social media?
- Will the January 1st imposition of a two-year ban preventing foreigners’ buying into Canada’s housing market result in more affordable housing for Canadians?
- Will most lumber industry associates we know maintain their lumber trader’s characteristic cheerful disposition by year end?
Tag Archives: lumber market
Year-end Answers – 2022
1. Will more lumber traders discover benefits of practicing mindfulness as a tool to improve mental well-being with ever increasing, stress-inducing market volatility?
Dr Jon Kabit-Zinn could be describing the ever-wary lumber wholesaler when he tells us that our minds spend most of the time in the future, preoccupied with either worrying or planning. Founder of the life-altering Mindfulness-Based Stress Reduction (MBSR) program, Kabat-Zinn defines mindfulness as “paying attention on purpose in the present moment, non-judgmentally.” Mindfulness meditation apps exploded in popularity during the pandemic. It seems reasonable therefore to assume more lumber traders discovered the benefits of mindfulness this year in midst of a punishing, prolonged market correction still unfolding.
2. Will either U.S. or Canadian men’s soccer teams record satisfying results in the World Cup in Qatar this year?
Making the knockout stage of the World Cup is considered a win by many after both the US and Canada missed the tournament entirely in 2018. With that in mind, we would consider the US advancement to the knockout stage more satisfying than Canada’s failure to earn a single point. Canada’s thrilling, grueling journey to qualify for their first men’s World Cup since 1986 will be this fan’s lasting memory.
3. Will the labour pool for truckers grow in North America?
While the labour shortage for truckers has eased slightly in 2022 after more than 80% of TL carriers raised pay last year, the industry still faces its second largest number of vacancies on record. American Trucking Association Chief Economist Bob Costello expects the shortage of truckers to double by 2028.
4. Will the latest record-shattering lumber market run end differently this time?
The Random Lengths Framing Lumber Composite Price peaked in Q1 at $1334 (Mar. 10) before disintegrating month after month through year-end ($380 Dec. 27). It’s well understood that lumber markets generally take the stairs up and the elevator down (in 2021, the composite crashed from an all-time high of $1515 in May to $389 in August). Perhaps the only thing different this time was the long, winding trip down.
5. Will contemporary democracy be deemed viable in America by the end of 2022?
Yes, it is deemed viable still. Results in the US midterm election underscored the resiliency of the US democracy. At the same time, there is evidence of agreement across the political spectrum that problems like money politics, identity politics, wrangling between political parties, political polarization, social division, racial tension and the wealth gap have become more acute. It is not a partisan conclusion therefore to acknowledge that all of this has weakened the functioning of democracy in America. While politics may appear to be less strident or discordant north of the 49th, there is general acknowledgement that creeping authoritarianism across the globe is a growing threat to western democracies everywhere.
6. Will Putin’s Russia invade Ukraine?
Yes. On 24 February 2022, Russia invaded Ukraine in a major escalation of the Russo-Ukrainian War which began in 2014. Reports indicate it’s likely there are tens of thousands of deaths on both sides, while causing Europe’s largest refugee crisis since World War II.
7. Will the Old Growth logging deferral be an unresolved issue for B.C. by the end of 2022?
8. Will pandemic woes be better or worse by end of 2022 in terms of impact on ‘normalizing’ our lives?
Covid variants are rising and new strains of respiratory flus are leading to hospitalizations that threaten overburdened healthcare systems. In terms of ‘normalizing’ our lives, there is ample evidence that ongoing programs of vaccination and common-sense health protective measures are playing out in most regions of the continent. We seem to be “living with it”. The same cannot be said for some countries such as China, where reported loosening of covid protocols is hardly deemed to be “normalizing” life.
9. Will the early lockout of Major League Baseball mean no summer ball? Should we care?
The MLB strike in 2022 ended March 10 with the signing of a new agreement. Issues raised between the league and union involved compensation for young players and limitations on tanking to receive higher draft picks. So there was a summer ball season. We might not have cared except for the Blue Jays exciting tease through October.
10. How will the accelerated pace of digital transformation across every organization alter collaboration between remote workers and office workers in the lumber industry in 2022?
Microsoft Teams has emerged as the cloud-based collaboration software of choice between remote workers and office workers in the industry. Further, the instant messaging and video meeting capabilities of remote communications platforms such as Microsoft Teams have helped close the geographical divide between lumber distributors and customers in all markets.
11. Will B.C.’s largest sawmill owners’ trend of expanding their investment in forestry operations south of the border increase unabated in 2022?
Last year set new records for lumber company acquisitions, with $2.2 billion of takeovers playing out in North America, more than the previous five years combined according to a report from analyst Paul Quinn, RBC Capital Markets. As early as March 2022, industry reports declared that investment banks were predicting Canada’s largest forest products companies would continue to expand south of the border by targeting privately-owned timberlands and sawmills. Early reporting by analyst Benoit Laprade of Scotia Capital showed that the enjoyment of excess cash flows early in the year underscored the economic attractiveness of acquisitions south of the border.
12. Will the longest reigning monarch in British history – Elizabeth II – be ruling over the British Commonwealth of Nations by the end of 2022?
Sadly, the answer is no. She was Queen of the United Kingdom and other Commonwealth realms, including Canada, from 6 February 1952 until her death 8 September 2022.
13. Will year-end survey ascertain that most lumber traders are in compliance with Center for Disease Control (CDC) recommendation of at least 7 hours sleep per night that is required for maintaining well-being and healthy life?
Our year-end survey at Dakeryn ascertained that most lumber traders are more likely to short their slumber than their lumber, by not being in compliance with CDC recommendation of at least 7 hours sleep per night. How trader sleep deprivation contributes to ill-advised market decisions or personal irritability remains an open question for another day, or year.
Am pleased to report that despite harsh winter weather in Vancouver before Christmas, we can pass along kudos to Dakeryn traders Daniel Binng and Phil Barter who shopped, assembled, and delivered company-record 50 food hampers to First United Church housing in Vancouver’s Downtown Eastside.
With lumber’s shocking collapse amid a wider world of angst, even market-hardened traders concede they could use a kitten’s cuddling at the end of another week of pricing trauma.
Lumber Market Survival Recipe
Recipe Highlights for lumber trader’s survival. A delectable turkey side dish of current lumber market opinion. Mix a peck of prudence with an abundance of caution. Stir in a pinch of patience. Flavor to pain tolerance. Mask temptation to taste before allowing adequate cooling. Stand back and stand by. Happy Canadian Thanksgiving!
Where, oh where has the market gone? This is the mournful lament intoned on lumber trading floors spooked well in advance of Hallowe’en this year.
Conditions testing the resilience of experienced traders are drawing comparisons with the global financial crisis and US housing market collapse of a decade ago. Today’s geopolitical landscape seems besieged with instability amid crises, including international trade concerns, rising interest rates, financial market volatility, and looming US elections.
Seasoned traders seek to offer reassurance and calm aimed at validating longstanding customer-supplier relationships. While financial analysts scramble to make sense of conditions in the face of seemingly disparate economic data, it seems timely to explore tips for dealing with the biggest lumber market meltdown in history.
Google has advice for handling times like these. One link offering “28 positive things you can do when business is slow” suggests a slow period is just another name for opportunity: “ask for help, take some down time, take a course, take up a hobby, network, develop new offerings, rethink your business model and processes, strengthen important relationships, write, teach, volunteer, exercise, study another industry.” Some guys have even been known to enthusiastically take up coaching – not one – but two girls’ soccer teams.
Another column suggested eating lots of leafy green vegetables to keep your cognitive abilities sharp and on high alert. Even so, we’re told Canada’s legalized cannabis should not be seen as a tool for alleviating anxiety in current market milieu.
Where, oh where has the market gone?
Like a saucer of yesterday’s beer.
I don’t wanna be short,
I don’t wanna be long,
In fact Duthie, I don’t even wanna be here.
– Ernie Harder, singing live at the 1995 British Columbia Wholesale Lumber Association Roast honoring Duthie Welsford, BCWLA Lumberman of the Year (recording below)
Markets in Fall
Breaking up is hard to do. Certain market segment’s love affair with record high lumber prices appears to be over.
Image Source: finfiz.com
Market Ripe for Picking?
Is the lumber market ripe for picking? Who knows. Unfortunately this week’s picking readiness signalled by my backyard apple tree’s bumper crop offers little guidance. Unlike apples dropping from a tree, falling lumber prices can’t be sure of where ground level support intervenes.
Google offered up helpful information that prompted this week’s timing to invite friendly volunteers from the Vancouver Fruit Tree Project Society to come set up their step ladders:
Wait for a couple of apples to fall from the tree. Apple trees naturally drop their apples when they are ripe in order to self-seed and reproduce. Watch for an apple or two to drop from the tree to determine if they are ready to pick.
When your apples are ripe, they should be fairly easy to pick from the tree with a simple upward twist of the apple. Try to avoid picking an apple by pulling the fruit straight down and tugging.
If otherwise healthy fruits begin to fall off the tree, they are probably beginning to get a little too ripe and should probably be harvested as soon as possible.
Now if only Google could offer up unambiguous harvest-time signals for lumber inventory managers.
Nudity and Heat Waves
We’re in for a heat wave. Wildfires threaten our woods, with B.C. Interior areas contemplating evacuation alert notices. It’s a stress-inducing situation that has even lumber traders wondering how to keep cool. Uniting in nudity is suggested as a solution by some. We read of a Newcastle, UK based marketing company who once decided to have a naked Friday, “to boost team spirit and improve employee morale.” Business psychologist David Taylor called it “the most extreme technique” he’s ever used. After a week of counselling and office activities aimed at building courage, most of the co-workers agreed to strip down to work in the buff for a day in an effort to boost production (and probably for a chance to be on TV). The ‘naked event’ is said to have turned around the company’s fortunes.
We’re told that Canada’s first and largest legal, clothing-optional beach, Vancouver’s Wreck Beach, is so crowded this week, there’s a lot of jostling going on to find room to park your fanny pack. It’s reported that at Wreck Beach, named among the world’s top 10 nude beaches, the atmosphere is very stress free. “When you shed your clothes, you shed the stress. It also helps you keep cool”. With lumber prices continuing to peel off this week, it may have some traders dedicated to serving supplier and customer needs from behind office desks wondering.
Lumber Market Upset?
The tensions of upsets in World Cup soccer matches are enjoyable. Market corrections that create upsets and tension, not so much.
The market adage that “nothing goes up forever” is presently shaping harsh realities in lumber prices. After peaking at $583 June 5th, the Framing Lumber Composite Price in the June 19th Random Lengths Midweek Report softly logged in at $562. Lumber Futures down $120 since the May contract expired (HT: @LumberTrading). Buyers and sellers of wood are experiencing Isaac Newton’s 400 year-old law that “an object in motion tends to stay in motion unless an external force acts on it.” Traders may be wondering what external forces will come into play to reverse the market’s present downward motion. Will it be another summer of devastating wildfires? Curtailed production? Underlying strengths of construction activity? More transportation woes?
In the meantime, we’ll look forward to teeing it up with distinguished representatives from Canfor, Carrier, Conifex, Dunkley, Hampton, Interfor, Millar, Sinclar, and Teal-Jones – all joining local retailers and staff members here tomorrow – for the mighty Dakeryn Golf Tournament at Riverway Golf Course in Burnaby, BC. — “FORE!!”
The sidewalks were deserted, the lobby was the same;
The place looked dark and dreary, except one window pane.
Behind it sat a weary man, his head held in his hand;
His face was steeped in anguish as he peered across the land.
He saw the blue Willamette that glimmered from afar,
But his mind was sorely burdened by an unsold transit car.
He snapped it up in early May when things were looking right,
And got the mill to ship it, but not without a fight.
It was a steal at seventy-two, his hopes were raised on high;
But lo when first he offered it, the dealers passed it by.
He shrugged and bade the railroad boys to slow her down a twist,
Then doubled up his efforts to get it off his list.
– Excerpt from “The Office Wholesaler”
(Author unknown – can anyone identify? circa 197_?)
Hat Tip: Ian White, Dakeryn Industries
Unfortunately our field trip for Thursday to Tupper Secondary for woodworking has been cancelled. The supplier for the wood has run out of supplies! So we will have to cancel. Thank you to all the parents who offered to take the time to drive us!
– Evie’s Grade One teacher (via email, May 23)
On the topic of dwindling fibre supply, it’s reported the B.C. Interior accounts for more than 90% of the province’s softwood lumber exports to the United States. So far this year, the significant decline in B.C. lumber shipments to the U.S. (down 20% in the first quarter according to the article) is widely attributed to transportation bottlenecks and export duties. However a bleak report here from The Globe & Mail this week serves as stark reminder to post-beetle, mega-fire, fibre scarcity realities – a land base “ravaged in turn by pests, fire and drought”.. a province with “barely enough timber now available to meet legal commitments to its major forest license holders”. After a recent fly over, B.C. Minister of Forests Doug Donaldson likened the Chilcotin Plateau, 60 kilometres west of Quesnel, to “a moonscape”. Never mind the missing trees; in some places we’re told, firestorms consumed even the soil.
In a report in February, the chief forester noted that the 2017 wildfires in B.C. affected over 1.2 million hectares, the largest impact on record (in about 100 years of record-keeping) for a single fire season. Most of that – about one million hectares – was in the Cariboo region. The fires consumed or damaged almost one-quarter of Quesnel’s timber supply. That is on top of the devastation wrought by the Mountain Pine Beetle epidemic, and sustained drought conditions that had led to fire bans in April – remarkably early. “We just cringe now when we see lightning,” Quesnel Mayor Mr. Simpson said. Now, a growing fir beetle infestation that somehow eluded last year’s wildfires is putting the remaining timber supply at risk. “There isn’t a tree species or a plantation that isn’t under stress due to increasing maladaptation to the current climate,” Mr. Simpson said.
– The Globe and Mail (21 May, 2018)
Meanwhile, Random Lengths reports lumber output in B.C. was down almost 8% in February from the same month a year ago; through the first two months of 2018, production in B.C. was down over 3%. On the bright side, according to Random Lengths, late-shipping railcars are beginning to roll into destinations more readily – welcome short term relief no doubt for razor-thin inventories at distribution yards and North American dealers starved for wood.
Of course in the long run, a global market is in play to influence supply and pricing. When demand for lumber increases, prices climb. When production ramps up, the supply/demand balance swings the other way and prices come off. What happens when production can’t ramp up?
The lion’s share of increased North America lumber production will need to come from U.S. mills.
– Russ Taylor, Forest Economic Advisors (FEA) Canada (19 Jan 2018)
The U.S. labour force is the single biggest constraining factor in U.S. sawmill production.
-Paul Jannke, FEA (5 Apr 2018)