The speculative bubble in lumber is popping. Here's what it means


An employee looks at hardwood logs stacked in piles in the yard at Superior Hardwoods of Ohio Inc. in Barlow, Ohio.

Ty Wright | Bloomberg | Getty Images

Investors buzzed the past four months about high flying technology stocks, but the biggest bubble of the summer may have been in lumber futures. 

The price of lumber futures skyrocketed to a record high of $928.5 per thousand board feet on Sept. 1, more than triple its levels during its low in April. As lumber mills shuttered closed amid nationwide lockdowns, Americans wanted new and improved houses, causing the price of the building commodity to balloon. 

Lumber futures were up more than 130% for the year at their peak in September, but the building commodity is coming back down, albeit to historically high levels. 

“The record strength has been driven by lean customer and mill inventories, production disruptions (Hurricanes, Pac NW wildfires, COVID-related downtime), and continued torrid demand from builders and retail channels,” Citi analyst Anthony Pettinari told clients. 

Lumber prices — both the futures price and the cash price — spiked during the coronavirus pandemic as the massive rebound in housing outstripped inventories as lumber mills shut down with the rest of the U.S. economy. Millions of Americans fled the country’s most inhabited hot-spot cities for more suburban, spread out living. The American Dream once again revolved around owning a home and housing prices and home building surged across the country. 



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