Lumber prices looking good in 2015

THINK OUTSIDE THE BOX:  While Albertans seem fixated on a certain commodity price that’s been tumbling lately, there’s some good news in other natural resource industries in the province. With a little help from our American friends and a favourable exchange rate, lumber producers are looking ahead to a great year.

In December, the composite price of lumber in the U.S. was $US 375 per thousand board feet. That compares to a five-year average price of $US 329. The price is a weighted average of 15 key framing lumber prices compiled and tracked each month by Random Lengths, a forestry sector publication and web resource based in Oregon. While the prices are in U.S. dollars, the composite index is a good indicator of lumber prices around North America.

Building materials such as lumber have been in stronger demand lately because of the revitalized U.S. housing market. Eight years ago the story was very different—an implosion of mortgage backed securities and a near-collapse of housing prices sent home builders packing. And along with that was a big drop in the price of lumber. Through a high Canadian dollar and mountain pine beetles, it has been a tough decade for Alberta lumber mills.

In 2015, however, the planets now appear to be aligning in their favour. Not only are lumber prices steady at some very high levels, the Canadian dollar has slumped to around $US 0.84. That makes exports to America even more competitive and lucrative.

 

Todd Hirsch • Chief Economist    January 20, 2015

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