Thread: Price for timber to drop?

Originally Posted by woodPixel

Timber prices will soon return to normal.
...
Prolly another 10% to slide, then it should stabilise, but I'd wager some of the commercial hedging companies (or slow supply chains!) have a LOT of expensive timber to clear....man are they going to get hosed.

Oh how I wish I could agree with you, WP, but ... The figures that you quote ultimately go back to the trading figures for "framing grade white pine" sold on the Chicago Board of Trade in contracts of 1,000 board feet, and sourced from a short list of US states and Canadian provinces.

CBOT - Lumber.jpg

This graph shows a high of US$1686 on 7-5-21 and a low of $456.20 yesterday. In Australian dollars per cubic metre these equate to Au$714 and $193. Yesterdays price is about 62 cent per super foot!

But timber is a bulky product and expensive to transport, freight and distribution costs are quite significant and then there is massive product differentiation:

• by species - cedar costs more than white pine,
• by sawing - quarter sawn, back sawn or rift sawn,
• by stress grading or machine grading,
• by visual grading - select is higher priced than standard grade,
• by size - wide boards are more expensive than strips,
• by the whim of the vendor.

Many years ago I worked in the international timber business and although we monitored CBOT (daily telexes fron Reuters), then there was very little correlation between CBOT prices and domestic wholesale and retail prices. There are so many layers and costs and delays in between and the "defined commodity" is so artificial.