Kyle Little, chief operating officer of New York wholesaler Sherwood Lumber, told CNBC on Thursday that the recent drop in timber prices has revived demand after a massive surge earlier this year challenged the affordability of construction projects.
“In the past three weeks we have seen renewed interest,” the industry veteran and former timber trader told The Exchange. “Our renewed interest is now turning into concrete orders and business deals for the second half of the year, especially in the commercial and multi-family house sector.”
Little’s comments on Thursday came as wood hit a low of $ 480.40 per thousand board feet, the lowest since July 8, 2020, when wood traded at just $ 465 per thousand board feet. Timber prices are on track for their 13th consecutive weekly loss after falling more than 9%.
In June, wood futures were down more than 40%, marking the worst month on record since 1978. The decline came when Americans began to abandon their homes instead of pursuing renovation and construction projects following pandemic standstills. Earlier this year, timber prices hit an all-time high of $ 1,670.50 per thousand board feet in May after hitting their pandemic low in April 2020.
The current wood prices are “absolutely sensible,” he said, pointing to the industry’s recovery from the pandemic-related sell-offs in the first and second quarters of 2020, which was followed by a sharp rise in costs. In June, when lumber was trading above $ 1,100 per thousand board feet, Little told CNBC it was advising people to wait before starting their construction projects and forecasting a further cut in lumber prices.
On Thursday, Little said that the timber market is now “going through this phase of equilibrium or looking for equilibrium”.
“What we are finding is that the level of support following the lower end of this pre-Covid continuous trend is very, very bullish,” Little said. “It’s also one that would give many of us in the woodworking industry a lot more confidence to rebuild inventory here for the second half of this year with the forecast demand we are now seeing.”
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