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Lumber prices hit record high

Lumber prices hit record high

Posted on: 4/16/2018 | Author: ATB Financial's Economics + Research Team

​​North American prices for framing lumber reached a record high last month. According to Random Lengths, a U.S.-based forest industry association, the price smashed through US$500 per thousand board feet. In Canadian dollars, the price is closer to $650.

The graph below shows framing lumber price movements since 2002. The price volatility rivals that of West Texas Intermediate, the benchmark price for crude oil, with prices either doubling or being cut in half over the course of a few years.

The recent surge in lumber prices has several roots, notably the soaring U.S. economy and strong housing construction. Last year’s breakdown in the Canada-U.S. softwood lumber agreement was also a contributing factor, as well as the new tariff the U.S. government slapped on Canadian lumber. The tariff has averaged above 20 per cent, the effect of which has been to limit lumber supply and drive up costs for American home builders.

Canadian lumber producers are understandably concerned about the tariff—and the lack of agreement on softwood lumber exports—but the record high prices are helping offset what’s been lost as a result. All of that has brought a much happier tone to coffee shop talk amongst those living in Alberta’s forestry towns.

Forestry prices, graph

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