Lumber has been particularly volatile in the past three months, but demand and prices for the commodity are poised for a long-term climb as the market...
The lumber market has been particularly volatile in the past three months, but demand and prices for the commodity are likely to see a long-term climb as a “new normal” emerges, analysts say.
That boosted demand for lumber, lifting futures prices LBX21, +3.62% LB00, +3.62% to a record-high settlement of $1,670.50 per 1,000 board feet on May 7. For now, the real opportunity for investors is “further up the supply chain in forestland investment,” he says. Increased demand for raw materials, including lumber, packaging, and mass timber, coupled with growing interest in reducing carbon emissions, suggest an “attractive entry point for forestland investment.” Early this year, for example, Weyerhaeuser Co. WY, +3.05% reached a deal to buy 69,200 acres of Alabama timberlands from a unit of Greif Inc. GEF, +1.64% for $149 million.
News that Chinese property giant China Evergrande Group 3333, +17.62% was on the brink of defaulting on more than $300 billion in debt contributed to a 6% drop in lumber futures on Sept. 20.
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