How Long Will High Lumber Prices Last?

Pricey lumber is here to stay—at least for the foreseeable future, says one lumber industry veteran. Kyle Little, chief operating officer at Sherwood Lumber and former lumber trader told CNBC that lumber prices will remain high, but not as high as the recent $1,711 per thousand board feet spike on May 10. He came to this conclusion by analyzing the past 35 years of bullish cycles in lumber. Analysis showed bullish cycles lasting anywhere from nine months to 41 months, but the average falling between 18 to 24 months. Currently, the lumber price boom is in its 11th month.

“Volatility is all over the place, and we expect that to continue to be that way in lumber,” Little said.

The Chicago Mercantile Exchange has a maximum price range, known as limit up and limit down, that futures contracts for various commodities are allowed to trade within for each session.

Lumber futures for July delivery rose 4.75% on Thursday, hitting limit up in the session at $1,390 per thousand board feet.

The action Thursday follows a wild session a day earlier, in which lumber futures hit limit down, then went on to hit limit up later in the day.

There have been questions about when soaring lumber prices, which add to construction costs, would begin to cause a cooling in demand. Recent data showed that in April single-family housing starts declined over 13% compared with the prior month, and the cost of lumber and other commodities was seen as one factor in the slowdown.

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