FX.co ★ Lumber Fall Toward $580

Lumber futures have decreased to around $580 per thousand board feet, continuing a decline from a peak of $685 on March 24th, which marked a two-and-a-half-year high. This drop reflects the downturn in construction demand, influenced by challenging trade policies. The United States' recent increase in duties on imported Canadian softwood lumber, raising rates to roughly 34%, has created uncertainty and driven up homebuilding costs, leading builders to postpone some projects. At the same time, Canadian lumber production is facing restrictions due to numerous sawmill closures, a reduction in timber availability caused by the mountain pine beetle, and stricter forestry regulations in important areas such as British Columbia. This has resulted in a surplus that continues to depress prices. Although there is a gradual move toward the use of the more affordable Southern Yellow Pine sourced from the U.S. South, its potential to replace the reduced Canadian supply is limited by logistical and technical challenges. Market participants are adjusting their expectations for lower demand amidst ongoing trade tensions and a sluggish construction sector.