Lumber Prices Break New Records, Adding Heat to Home Prices
03 Maio 2021 - 6:19PM
Dow Jones News
By Ryan Dezember
The frenzied climb in lumber prices is generating superlative
profits for sawmill owners. Home buyers, renters and
do-it-yourselfers are footing the bill.
Wood prices pushed further into record territory, a sign that
Weyerhaeuser Co., Canfor Corp. and other sawmill owners are in line
for even fatter profits than the record earnings they have been
reporting for the first three months of 2021.
These companies have emerged as the biggest beneficiaries of the
wood boom. They are feasting on a glut of cheap pine trees in the
U.S. South while their finished products like lumber and plywood
are flying off hardware-store shelves and being bid up by home
builders.
Lumber futures delivery later this month ended Monday at
$1,575.60 per thousand board feet, a record and more than four
times the typical price this time of year. Futures rose by the
daily maximum allowed by the Chicago Mercantile Exchange during
nine of April's 21 trading sessions.
Exchange rules remove daily trading thresholds during the month
in which a futures contract expires, which means May futures have
no limit to how high they may rise before the 15th, when the bets
are settled. On Monday, May futures shot up $75.60, the most ever
in a single day.
On-the-spot prices for two-by-fours and other wood products also
have jumped to fresh highs, according to pricing service Random
Lengths. Traders worried about being left empty-handed capitulated,
and the firm's framing-lumber-composite price made its highest ever
weekly gain, ending April at a record of $1,290.
"Nervousness on the part of many traders was palpable, as they
considered what the downside of the run might look like," Random
Lengths said in its weekly report.
Mill owners say they are backed up with orders into June. Boards
for July delivery, the most actively traded futures contract, ended
Monday at $1,418.50. September lumber cost $1,277.
"Absent a significant increase in mortgage rates or a Covid
resurgence, it is hard to imagine what could cause lumber demand to
drop and prices to moderate in the foreseeable future," said Eric
Cremers, chief executive of PotlatchDeltic Corp., which owns
timberland and mills in Idaho, Arkansas, Michigan and
Minnesota.
The Spokane, Wash., company's wood-products division earned
$125.5 million during the first quarter, its best ever. Lumber
futures have risen by about two-thirds from the $890 average price
that Potlatch fetched during the first quarter.
"Builders are reporting record home sales, and they're going to
need that wood to build those homes," Mr. Cremers told investors
and analysts last week.
To emphasize how tight supplies have gotten for many wood
products, the CEO told them about his own fence, which blew over in
a storm, and the landscaper who had to drive 100 miles out of town
to find cedar posts to fix it.
When the economy was shut down last year to slow the spread of
the coronavirus, sawmills sent workers home and curtailed
production. By April, roughly 40% of North America's sawmill
capacity was shut down.
U.S. wood product output returned to pre-pandemic levels in
December, according to the Federal Reserve. Yet production remains
about 16% lower than the 2006 peak, which is the last time so many
houses were being built.
The Fed last week recommitted to near-zero interest rates, which
have fueled the red-hot housing market. Rising home prices and low
rates have also helped existing homeowners refinance mortgages to
pocket cash without adding much to payments. Mortgage-finance firm
Freddie Mac estimates that Americans last year withdrew nearly $153
billion from their homes in cash-out refinancings. Vacation options
were limited by the pandemic and a remodeling boom ensued.
Demand hasn't been diminished by soaring prices, mill executives
say.
"The prices appear to be passing on," Canfor CEO Don Kayne told
investors Friday. Canfor, which owns mills in northwest Canada and
throughout the U.S. South, notched quarterly records in sales and
profit. "So far we haven't seen the resistance that you would
expect."
Builders including PulteGroup Inc. and the Howard Hughes Corp.
say they have offset higher prices for lumber as well as for other
building materials by raising home prices without slowing sales.
NexPoint Residential Trust Inc. investment chief Matthew McGraner
assured shareholders that high lumber prices weren't eating into
the apartment owner's margins. "Any additional costs, we've been
able to pass on to the tenants," he said.
At a recent investor conference, Lowe's Cos. finance chief David
Denton said the home-improvement chain and its rivals weren't
waiting to see if the run-up in lumber prices would be short-lived
before raising prices.
"That largely gets passed on pretty much real-time into the
marketplace and you're seeing that across the industry," he
said.
Write to Ryan Dezember at ryan.dezember@wsj.com
(END) Dow Jones Newswires
May 03, 2021 17:04 ET (21:04 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
Canfor (PK) (USOTC:CFPZF)
Gráfico Histórico do Ativo
De Jun 2024 até Jul 2024
Canfor (PK) (USOTC:CFPZF)
Gráfico Histórico do Ativo
De Jul 2023 até Jul 2024