Lumber Prices Dropping in Futures Market, But Retail Prices Remain High

By William Atkinson | Aug 2, 2021
Photo by Marissa Daeger on Unsplash

Earlier this year, housing builders and potential homebuyers were struggling with rising affordability issues, largely due to soaring lumber prices.

According to CNBC, lumber prices hit a record high on May 7, at $1,670.50 per thousand board feet, which was six times more than their pandemic low in April 2020.

However, according to the article, prices of lumber on the futures market have been falling. While lower lumber prices on the futures market are a welcome sign, lower retail prices are not yet a reality, according to CNBC.

“The price of lumber packages quoted to homebuilders is still at a record high,” according to the article. “Retailers, of course, want to buy their product low and sell high, so they’re still selling the inventory they have at higher prices, despite what the futures market says. Also, given soaring demand and supply chain issues, their inventory is low anyway, and there is still demand, so retailers have no reason to lower their prices.”

This will change in the coming months, according to the report.

According to the National Association of Home Builders (NAHB), lumber prices have indeed dropped in recent weeks. And, as a way to encourage further price decreases, the NAHB was recently part of a White House supply chain summit, which provided a forum to discuss issues and possible solutions related to the supply chain for materials, specifically lumber.

Besides the increasing demand for lumber, another part of the price issues relates to tariffs. Currently, according to the NAHB, the United States is imposing a 9% tariff on Canadian lumber shipments, and a preliminary decision by the U.S. Commerce Department could double that tariff by this fall.

However, according to the NAHB, Mary Ng, who is the Canadian minister of small business, export promotion and international trade (in other words, Canada’s their top trade official), in a video conference with NAHB, expressed a “strong willingness and desire” to engage in negotiations with the United States on a new softwood lumber trade agreement. Ng also met with her U.S. counterpart, U.S. trade representative Katherine Tai, to discuss the issues of U.S. tariffs on Canadian softwood lumber and the importance of keeping interconnected supply chains open.

About The Author

ATKINSON has been a full-time business magazine writer since 1976. Contact him at [email protected]

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