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Lumber Prices Drop as Supply and Demand Rebalance

Republicans like Senator Jim Bolin (R-16/Canton) have been stirring false fears that the Biden Administration’s economic recovery efforts are causing drastic inflation.

Just look at the price of lumber:

Lumber prices extended a string of losses last week, leaving prices for the key building material slashed by more than half from their peak on a mix of factors including easing shortages.

Lumber prices fell for an eighth straight week as they lost roughly 5%. The weekly decline was spared from a deeper contraction, however, as prices on Friday picked up about 1% to trade at $741 per thousand board feet.

But the weekly performance highlighted persistent weakness that’s been stalking prices since they began descending from their peak of $1,670 per thousand board feet on May 7. Wednesday marked the end of trading in June and prices closed the period with a fall of 45%, the worst monthly drop since 1978.

Prices as of Friday from the May peak have tumbled about 56% [Carla Mozée, “Lumber Prices Just Dropped for an 8th Straight Week—And They’re Down More than 50% from Highs as Record-Setting Demand Slows,” Business Insider: Markets, 2021.07.04].

So does President Biden get credit when lumber prices go down? Well, maybe a little, since he helped us get our shots so we could put down our SkilSaws and go on vacation:

The quick reversal of lumber’s monthslong rally came as Americans started to go on vacations again amid the economic reopening instead of taking on renovation and building projects. Many who are fearful of persistent inflation also took comfort in the drastic decline in prices in the face of cooling demand [Yun Li, “Lumber Prices Dive More than 40% in June, Biggest Monthly Drop on Record,” CNBC, 2021.06.30].

But the market is also catching up with supply:

“This drop suggests that the cause of that inflation—the mismatch of supply and demand—will not last forever,” said Brad McMillan, CIO at Commonwealth Financial Network. “As suppliers across industries get their acts together, those shortages will fade, along with the inflation. That looks to be happening for lumber now and will happen for other inputs later” [Li, 2021.06.30].

Trading Economics, lumber prices July 2016–June 2021, retrieved 2021.07.05.
Trading Economics, lumber prices July 2016–June 2021, retrieved 2021.07.05.

Lumber prices are still 82% higher than they were two Julys ago, but what do you expect when America has spent more than a year cooped up in the backyard fixing its decks and garages and kitchens and basements?

5 Comments

  1. Donald Pay 2021-07-05

    Most of that “inflationary” rise in lumber price came during the Trump Administration, partly the result of higher demand for single family housing. That was caused by Trump’s poor response to Covid-19. I wish dumbasses like Bolin would do a little research and thinking before mouthing nonsense. But, then, asking a Republican to do some research and think is asking the impossible.

  2. Mark Anderson 2021-07-05

    Well, the motto of Republican teachers is “ignorance is bliss”.

  3. John Dale 2021-07-05

    Thank God. Now we can resume the import of people who don’t understand SD, but who work hard (slav labor), and are willing to live “out there” in our slav quarters .. I mean .. workforce housing.

    But I’m glad I can get lumber now. I want to build another shed outside.

    And no, get thee behind me mike from iowa, I will not be housing illegal Mexican roof repair labor in there.

  4. Porter Lansing 2021-07-05

    You’re building your spouse another herb grow house, aren’t you Chip/Dale? (👀’s on you from our satellites)

  5. Richard Schriever 2021-07-06

    Another element was Trump’s implementation of tariffs on Canadian lumber. Last 2 purchases of PINE I made were labeled as being products of Brazil and New Zealand.

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