ScotiaBank commodities expert Patricia Mohr predicts a surge in lumber prices within the next two or three years due to the devastation caused by the mountain pine beetle infestation which has resulted in a reduced annual allowable cut in B.C..
The good news prediction from Mohr comes out of the March 29 Scotia Bank Commodity Price Index (CPI).
The CPI reports that western spruce-pine-fir 2×4 lumber prices jumped from $230 U.S. per mfbm [thousand board-feet] in Jan. 2010 up to $282 U.S. per mfbm in Feb. 2010, as U.S. dealers restocked very low inventories ahead of the spring 2010 building season.
Mohr said, “Though prices have edged down again to $275 U.S. per mfbm in March, as inventory buying slowed, lumber prices should average $243 per mfbm in 2010, well above the $178 U.S. per mfbm in 2009.”
Another pick up in prices has also been forecasted by Mohr in the [traditionally] seasonally strong third quarter of 2010.
According to Mohr, heavy snow and rain in the eastern U.S. pushed down U.S. housing starts to only 575,000 units during Feb. 2010, although January building estimations were revised up to 611,000 units.
“U.S. housing starts should improve modestly to 700,000 units in 2010 and 1.04 million in 2011, up from a very weak 550,000 units in 2009,” said Mohr.
The CPI also reports that U.S. spending on home renovations is also performing better than expected, as buyers fix up low-priced, foreclosed homes.
“Around 2012- 2013, lumber prices and timber values in the B.C. interior are likely to skyrocket, as the annual allowable cut is reduced in B.C. due to the mountain pine beetle infestation and as the capital destruction of the past four years translates into fewer than expected North American mill re-starts,” said Mohr.
According to Mohr residential housing is currently being under built in the U.S.