Investing In The Woods

Posted by Rumin Mann
February 26th, 2010

In early February the stock market was trading off its recent highs. Gold had pulled back substantially, and most other commodities were taking a hit as the U.S. dollar rose. However, one commodity has been able to shrug off the selling and hit a fresh two-year high in February – timber.  Price Of Lumber Highest Since 2007 – The price of timber rose above $280 per 1,000 board feet in February, the highest since August 2007. And in the last year, the commodity is up approximately 60%, slightly ahead of U.S. equities. The rise in lumber is confusing to many because the housing market has yet to show sustainable recovery signs. Considering the housing sector is responsible for 45% of the lumber demand, according to the Western Wood Products Association, the rise in timber can suggest a few things. For starters, the rise in timber could be a leading indicator that the housing market is about to turn, as the commodity’s price rises before the next demand surge. On the other hand, the price increase could be tied to the fact that timber supply has dropped dramatically, as less was produced during the recession. Finally, it could be that lumber is rising with every other commodity and asset class off the March lows after investors priced in a depression scenario that never occurred. Read More

Comments are closed.