Lumber, The Truth of The Matter
The Truth of The Matter Concerning the Surge of Lumber is that; Yes, it’s true that prices of wood have gone up. We all thought it was because of the “Trump Tariffs”, but they were actually because of the dispute between Canada and the US. The Tariffs just add to the increase in timber prices.
You see, there is a combination of things that have caused the timber prices to increase and one of the main causes is the restricted supply and growing demand because the main restrictions come out of Canada and they have had some major pine beetle issues. Whereas the demand in the Us continues to grow.
Another issue is that the lumber markets have been hit with a series of supply shocks in which has also caused the increase in prices. The fires that Canada, Washington, Montana, and Oregon have been seeing has limited loggers out of the forests. Then when they were allowed back in, winter came in with an abnormally cold front that wreaked havoc on the railway, limiting their cars as well as the speed of the transportation. So, of course, led to delays, and then back orders.
As you can imagine the domino effect it had moving forward: as the weather eased, the priority was given to the necessary, high-value goods such as the grains and potash that is in high demand, which worsened the delays for the timber.
We see one more piece of the puzzle that the trade restrictions are not the primary issue of the increasing wood prices. OSB and plywood are also a part of the same supply and demand as lumber and presently, there are no current trade restrictions between the U.S. and Canada on plywood or OSB. Yet as we have seen in the past few years; the prices for OSB and Plywood have both risen by 50%. By contrast, the Random Lengths Framing timber prices have also risen by the same percentage.
So, as we can see, the restrictions were the initial cause back when they were imposed in 2017 but they were not and are not the primary cause in the increase in lumber prices.