In December, lumber prices surged past the $550 per thousand feet benchmark, marking their highest point in the past five months. This upward trend was primarily propelled by several key factors.

Firstly, there was a growing anticipation of heightened demand in the housing sector, partly influenced by signals from Federal Reserve officials indicating the possibility of three rate cuts in 2024.

Secondly, the latest economic data from the United States pointed towards a resurgence in the construction industry, with a noteworthy 14.8% month-over-month increase in housing starts to reach an annualized 1.56 million in November 2023. This figure not only surpassed market forecasts of 1.36 million but also represented the highest level seen in six months.

Furthermore, the lumber market benefited from a tightening supply situation, which offered some relief.

The industry experienced a notable 2-3% reduction in supply during 2023, primarily attributed to decreased production in North America.

The Forecast

Lumber has seen a significant uptick in 2023, with a price increase of $61.50 per 1000 board feet or a 12.39% rise, as indicated by trading on a contract for difference (CFD) monitoring the commodity’s benchmark market. Forecasts from Trading Economics, based on global macro models and analyst expectations, suggest that lumber is projected to reach $580.62 per 1000 board feet by the end of the current quarter. Looking ahead, it is anticipated to further appreciate, potentially reaching $658.40 in the next 12 months.

Lumber Prices have show similar fluctuation with 2022

The working forest desember 2023 forecast chart2

Western S-P-F 2×4 #2&Btr KD (RL) lumber was priced at US$408 mfbm, which was a decrease of $6 (one percent) compared to the previous week’s price of $414. However, it was up by $5 (one percent) compared to one month ago when it was $403 mfbm. Compared to the same week the previous year, the price was up by $14 (three percent), but it was down by $296 (42 percent) compared to two years ago.

Southern Yellow Pine East Side 2×4 #2&Btr KD (RL) lumber was priced at $445 mfbm, which was an increase of $15 (four percent) from the previous week’s price of $430. It was also up by $31 (seven percent) from one month ago when it was $414 mfbm. However, compared to the same week the previous year, the price remained flat. When compared to two years ago, it was down by $390 (47 percent).