Weyerhaeuser plans to expand lumber for the next decade

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Weyerhaeuser plans to expand lumber for the next decade

The hardwood market could keep demand strong for the next decade if the biggest American lumber producer said Tuesday.

In anticipation, Devin Stockfish was eyeing forests and sawmills to expand production of boards and planks, Chief Executive Weyerhaeuser Co. told the Nareit ReITweek 2021 Investor Conference on Tuesday. The American company already owns 11 million acres of Seattle timberland.

Stockfish said we're going to continue to look for timberland opportunities. 'Every deal that comes to market, we're looking at so I would expect us to continue to be active on that front.

The stock of Weyerhaeuser have climbed in the last year in the past year 45% and reached an all-time high early last month. The shares were up 0.3% in New York at 1:55 p.m. to $35.79.

Wood prices soared higher than $1,000 per 1,000 board feet for the first time this year before touching a record high in May on a surprise surge in residential construction amid pandemic lockdowns and rock-bottom borrowing costs.

Some potential home buyers are pushed out of the market but, for lumber producers, the rally has led to all-time high profits. Although Stockfish sees years of strong demand, he regards the recent price frenzy as unsustainable.

Stockfish said that I don't think the $1,000 lumber prices are the new normal, but it is not. With that being said, when you think about the amount of housing we'll have to build in the U.S. over the next three, five years, 10 years, that's just a significant amount of demand for wood products.

U.S. lumber futures for July delivery tumbled from last month's record, extending losses Tuesday to a seven-week low at $1,160. 10 as domestic renovation demand shows signs of weakening and some builders wait for lower prices.

That's down 33% since 11 May (10rd peak above $1700). Some prices on the cash market, where most builders buy lumber for immediate delivery, have also started to drop after sawmill production ramped up.

Stockfish canceled its bullish outlook on the same day as rival Canfor Corp. announced that it would invest about $160 million in a new sawmill in Georgia and delivered a previously announced project in Louisiana. The world's biggest lumber producer, Interfor Corp. is expanding their capacity at five U.S. - mills while West Fraser Timber Co. intends to buy four Georgia-Pacific LLC sawmills.

More stories like this are available at bloomberg.com.

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