Business Insider is arguing that lumber prices have bottomed out even though they are still over double the historical average…
- The new normal. Stinson Dean, CEO and founder of Deacon Trading, expects lumber to trade above $1000 for potentially the next three to five years. “My argument is the new normal is going to be significantly higher than the old normal while others think we’re going to go back to pre-COVID price ranges.”
- Elevated but down from the high. “After an intense run-up in the beginning of the year, Lumber has fallen nearly 50% from May’s record high of over $1,700 per thousand board feet.”
- A short squeeze. Dean sad that lumber futures began trading in contango because everyone needed lumber as soon as possible, and they were willing to pay whatever price for it. Dean explains, “People didn’t care about two months down the road, they only cared about right now because they were in the middle of a short squeeze. They had to get covered,” Dean argues that things are bearish or bullish. It really means that “supply and demand are normalizing, and an equilibrium is being found.”