The US lumber futures hit a 19-month high amid expectations for demand to surge as thousands of homes, damaged by the superstorm Sandy, are rebuilt in the coming months. Source: Reuters
Trade sources said the home-rebuilding process in the northeastern United States, which bore the brunt of Sandy, could stretch well into 2013, keeping demand for lumber robust.
Efforts by homeowners to quickly rebuild or repair their homes could be hampered by the fact that lumber mills usually reduce stocks going into the winter months, when demand tends to wind down.
“The widespread impact of the storm could increase demand for lumber over the next several months. With such devastation it could take a month or so for any rebuilding to start,” said Gary Vitale, president of the North America Wholesale Lumber Association, a grouping of 450 mills and wholesalers.
The association represents about a fifth of all physical lumber traded in the United States.
Vitale said lumber for the rebuilding would likely come from mills in the northwestern and southeastern United States, and also from eastern and western Canada.
Most of the Chicago Mercantile Exchange lumber futures rose by the daily trading limit of $10 per thousand board feet and ended the pit trading session locked at those levels.
“Inventories are on the low side, in part due to the seasonal trend as we get into the winter months,” Jon Anderson, president of Random Lengths, which tracks prices and trends in the lumber market, said by telephone from Eugene, Oregon.
He said prices for lumber in the cash market began advancing last week in reaction to Sandy. Prices for western spruce in the cash market have risen 7.5 percent since last week, according to data from Random Lengths.
Traders said the lumber market has been gaining momentum in recent weeks amid promising signs in the housing market, which was at the heart of the financial meltdown in 2008.
