FX.co ★ Lumber Near 2-1/2-Year Highs

Lumber futures experienced an uptick, nearing $680 per thousand board feet, closely reaching the two-and-a-half-year peak of $685 recorded on March 24th. This surge is primarily fueled by the impending threat of increased tariffs. The proposed tariff hikes could potentially elevate Canadian lumber duties from approximately 15% to nearly 40%. This is significant considering that Canada provides about 25% of U.S. lumber, despite some production shifting to the U.S. South. Concurrently, the housing market shows slight contractions year-over-year, with housing starts dropping by 3% in comparison to the previous year, and new home sales displaying a similar decline, although existing home sales remain relatively stable. This environment of persistent supply constraints—aggravated by transportation delays and inventory stockpiling—paired with the continuous, albeit slightly muted demand within the construction industry, highlights a market scenario where tariff-induced supply pressures uphold elevated lumber prices amidst ongoing uncertainty.