Lumber futures rose to a six-year high, extending a rally that is the biggest of any commodity in 2012, on mounting signs of tighter supplies as U.S. home construction rebounds.
Prices have surged 37 percent this year, more than any of the 24 commodities tracked by the Standard & Poor’s GSCI Spot Index. Lumber has more than doubled since January 2009, when the recession and a collapse in the U.S. housing market left a glut of wood. Since then, output plunged in Russia while China boosted imports, limiting supplies in North America just as demand rebounds, according to International Wood Markets Group.
Housing starts that in October reached an annual rate of 894,000, the highest since July 2008, may exceed 1 million a month by the end of 2013, Michelle Meyer, a New York-based senior economist at Bank of America, the second-biggest U.S. lender by assets, said earlier this month. U.S. building permits, a proxy for future construction, reached a four-year high in September, government data show.
“Housing inventories are coming down, and housing prices are coming up in major markets in the U.S.,” Hakan Ekstrom, the president at Wood Resource International LLC in Seattle, Washington, said in a telephone interview. “That’s an indication that demand is higher than supply and that’s likely to continue next year.”
Lumber futures for January delivery gained 1.2 percent to $359.10 per 1,000 board feet at 1:05 p.m. on the Chicago Mercantile Exchange, after touching $360.80, the highest since April 2006.
The Standard & Poor’s Supercomposite Homebuilding Index has climbed 22 percent since the end of June. Sales of previously owned homes probably rose to a 4.9 million annual pace, a three- year high, economists forecast that a report from the National Association of Realtors will show on Dec. 20.
Recovery from Hurricane Sandy, which killed 37 people when it struck the East Coast in October, causing $36.9 billion in damage in New Jersey alone, also has helped improve lumber demand and prices, James Stellakis, the founder at Technical Alpha Inc., a researcher based in Greenwich, Connecticut, said in a telephone interview.
“The combination of Sandy renovations and the reports about housing ticking up” is helping prices, said Stellakis, who forecast lumber will reach $400 by May. “People are getting ready for the spring housing season. They’re getting their supplies bought to secure what they think they’ll need before the building season in March or April.”