SEPTEMBER 2020
moving target as they try to secure a share of limited inventories while staying one step ahead of the competition and maintaining build schedules. When this kind of panic grips a commodities market, it oftentimes spins into a speculative scenario in which prices deviate significantly from intrinsic values.”
This combination of events resulted in a tremendous gap in the market, and the supply chain has not had the opportunity to rebalance. While we are now five months removed from the onset of the lockdowns, the finished lumber sector is facing a new challenge as production in the PNW and western Canada has been impacted by devastating wildfires, which have claimed dozens of lives and inflicted significant damage to communities, homes and businesses, and timber resources in the region.
Though order files remain full, the most recent data and market information suggest that lumber prices may have peaked and are now beginning to wane. As producers continue to react to market signals and are better able to match production to current demand trends, the supply/demand relationship is likely to equalize and the North American lumber market will find its footing.