It’s a classic case of supply and demand.

The surge in lumber prices over the last year has been stunning with North American benchmark prices setting new records each week. Chicago lumber futures, for example, started 2020 at just over US$400 per thousand board feet but hit the 1,700 mark at one point on Friday.

With COVID-related restrictions in the U.S. easing and the spring construction season underway, the demand for lumber south of the border has increased.

At the same time, the Canadian residential construction industry is expected to do well this spring and summer. Data from Statistics Canada released last week show that the value of residential building permits, which cleared the $8.0 billion mark for the first time, were 61% higher in March than two years earlier before the pandemic.

On the other side of the equation, lumber supply has been constrained by pandemic-driven labour shortages, the mountain pine beetle infestation and production cuts made in anticipation of reduced demand during the pandemic.

Demand, however, actually increased as homeowners undertook more remodelling projects during the pandemic and low mortgage rates helped spur new construction.

At the moment, it looks like supply constraints and robust demand will keep lumber prices relatively high. Prices will moderate as producers start to catch up, but a return to more “normal” prices could take a year or even longer.

Answer to the previous trivia question: According to the 2016 Census, the most common mother tongue in Alberta other than English and French is Tagalog (Pilipino, Filipino).

Today’s trivia question:  What was the pre-pandemic high for Chicago lumber futures set in May 2018?