Lumber Futures up 200% - Lumber mania is sweeping North America

[Ninja Mobile Trader VPS]

Building a home is on average 100k more expensive today than it was a few months ago, due to spiking lumber prices. https://www.vox.com/22410713/lumber-prices-shortage

I've posted about the hard drive shortage impacting data centers and the capacity crunch of VPS availability. Now lumber is next!

Exchange traded Lumber Futures:

 

[Scataphagos]

That's because there's "no inflation the Fed can see".

 

[maxinger]

unfortunately, the volume is almost zero.

Is there any other Lumber futures from other exchange with
significantly higher volume of say > 20 000 / day?

 

[FSU]

Building a home is on average 100k more expensive today than it was a few months ago, due to spiking lumber prices. https://www.vox.com/22410713/lumber-prices-shortage

Not sure where you're getting the 100K number. The article you linked says the average house costs about 30K more due to lumber.

"Prices have, in turn, skyrocketed. For years, the price of 1,000 board feet of lumber has generally traded in the $200 to $400 range. It’s now well above $1,000. (One board foot is 12x12x1 inches, and the average new single-family home takes about 16,000 board feet of lumber to construct.) A new house that would have cost $10,000 in wood to get off the ground a couple of years ago now costs $40,000 worth of wood — assuming, that is, you can even get your hands on the lumber."

 

[Ninja Mobile Trader VPS]

Sorry the 100k number was primarily around the coastal metro cities. But even in cheap towns where a single family home is 100k total, an increase of 30k in just lumber material is a huge percentage increase of the total value.

 

[Ninja Mobile Trader VPS]

View attachment 258345

unfortunately, the volume is almost zero.

Is there any other Lumber futures from other exchange with
significantly higher volume of say > 20 000 / day?

Lumber futures space is dominated by a few large players and liquidity is very thin.

According to Tom McClellan, "The lumber futures market is not agreeing with the price rise which the traders in this market are themselves undertaking. If this was a legitimate up move for lumber futures prices, then we should expect to see open interest rising along with prices. Instead, the lower open interest numbers are saying that the up move in prices is not legitimate, and should reverse itself. A couple of other episodes are highlighted in the chart above. The implication is that lumber prices are not going to be able to sustain this up move.

One more point to know about lumber prices: when there is a blowoff top, the slope upward is usually symmetrical to the slope downward."
https://www.mcoscillator.com/learning_center/weekly_chart/lumber_blowoff_and_falling_open_interest/

 

[bln]

Is is fake artificial demand by speculators or is it real demand by builders of wooden houses.

 

[zdreg]

Sorry the 100k number was primarily around the coastal metro cities.

Isn't the % increase in low cost area likely to be higher than in areas where housing is very expensive? e.g. Food may cost more in expensive areas but as a % of budget it is less.

 

[zdreg]

Is is fake artificial demand by speculators or is it real demand by builders of wooden houses.

Basic question: are there substitutes for lumber in home building?

 

[Ninja Mobile Trader VPS]

Is is fake artificial demand by speculators or is it real demand by builders of wooden houses.

I get the impression it is from real demand for lumber and supply constraints at sawmills.

Here's a recent WSJ segment covering the topic. Sounds like raw timber prices haven't changed, and all the extra profit is being made by sawmills. Lumber futures are too thinly traded, but it looks like publicly traded sawmills can be a good alternative for speculating on lumber prices.

For example, UFP Industries, Inc is a lumber company and look at its returns compared to the S&P500.