Seasonal benefits are coming, and Wood is expected to soar!
Timber prices have plummeted from the peak of the epidemic. According to Joshua Mahony, senior market analyst of IG trading platform, timber prices will rise 65% by the end of 2021.
As of last Friday (July 30), timber futures prices hovered around $603 per thousand board feet, 64% lower than the record high of $1711 set in May. A year ago, the transaction price of this commodity was about $448 per thousand feet.
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timber prices, which continued to fall, finally slowed down the downward trend last week. However, the trend of the market will not change immediately. The fact that market distributors control the initiative of the current market, while the sawn timber factory facing the off season of summer sales can also accept the current market price for the consideration of maintaining market shipments.
However, according to Mahony, with the adoption of the 1.2 trillion-dollar two-party infrastructure agreement in Congress, the near zero interest rate has led to a continuous rise in house prices and seasonal historical trends, timber prices are likely to rise again to as high as $1,000 per thousand board feet.
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most of the infrastructure plan will be used to build roads and bridges, which will undoubtedly stimulate the demand for building materials including wood. Most importantly, many Americans continue to build new houses or renovate existing ones.
Despite rising house prices, low interest rates, consumers' attention to the importance of housing, and strong demand in low-density markets such as suburbs and outer suburbs continue to support residential demand.
How long will this price last? For the North American timber market, although the price of the futures market fell by 64%, due to the potential huge difference between the dealer's inventory holding cost and the inventory buying and selling price, as a result, the price paid by terminal market builders remains high. The price level of Terminal houses cannot be effectively improved in the short term.
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the senior analyst also pointed out that there were seasonal factors behind his forecast.
Mahony said that the last quarter of the year is usually the "active" period of wood. In the past 12 fourth quarters, timber prices rose in 9 quarters, while the decline in the other 3 quarters was very small, less than 5%.
"There are good reasons to believe that the decline in recent months may soon bring another major buying opportunity, allowing Bulls to regain their dominant position." He said.
Mahony believes that the fact that the increase in the first half of this year has been erased is "not abnormal".
Mahony said, "Historically, this reversal will lead to a bullish reversal, recover lost ground, and turn the situation positive before the end of the year. The current callback is actually part of the seasonal trend, and there is usually a dramatic recovery near the end of the year."
(Article Source: Furniture Industry-public number, invasion and deletion)
