Tuesday, lumber prices in Chicago became new record highs with uncertainty about wood supplies hitting at a time when construction products are most in demand.
It is peak home building season in the U.S. and that's clashing with a lumber supply chain that's being dogged by everything from trucking delays to shortages of workers.
Clearly, the lumber prices, which are at historic levels, have entered a violent stage, said Joshua Zaret, a senior analyst at Bloomberg Intelligence.' It is all driven by supply, and right now it's just the uncertainty of supply.
The pandemic left Americans with a larger-than - usual appetite to renovate or buy new homes, which is behind the quadrupling of lumber costs this year in 2013.Builders who need wood for spring construction are struggling to find it, so they're going to the futures market and pushing prices up to new lows, said Brian Leonard, a lumber analyst at RCM Alternatives in Chicago.
There's still such a thing as too expensive of a money to buy it.The market saw wild swings on Tuesday with prices falling and then rising by exchange limits.
'We needed to get to a price where the buying stopped, said Mike Wisnefski of MaterialsXchange in Chicago.
Speculators with long positions may have also taken profits, contributing to the sudden price drops, said Stinson Dean, chief executive of Deacon Lumber Co.
The July futures contract came up on the Chicago Mercantile ExchangeChicago Mercantile Exchange from the $48 exchange limit to $1,334. 60 per thousand board foot, an all-time high, before declining by the same limit to $1,238. 60 briefly at the Chicago Mercantile ExchangeChicago Mercantile Exchange.
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