Posts

Ag Analysis Report 8/15/20 - Will Covid-19 Continue To Bless Lumber Prices???

avatar of @rollandthomas
25
@rollandthomas
·
·
0 views
·
2 min read

Many cities were already seeing a people move out of the cities, COVID-19 only expedited the migration. June also saw the lowest number of new lease signings for that month in New York City, in a decade. Not only are New York City residents are looking for more space, but there is less incentive to stay put because their employers are telling them to work at home. In the case of New York City, the migration could result in cuts in tax revenue, but also services like schools, transit, police and fire because of reduced revenue.

At the onset of COVID-19 lumber prices declined as home builders construction halted their operations, leaving mills with excess supply of lumber. But all that has changes since the economy started opening up again. And as the inventory for lumber declined, rather quicker, mills could no longer keep up with demand which created a huge imbalance in the supply and demand equation for lumber.

According to the National Association of Home Builders, lumber used for framing homes account for roughly 20% of the materials cost of building a home. Right now those homebuilders have leverage and just passing on the cost to the buyers like me and you. However, that’s not deterring buyers away from buying homes as space is the best defense to play against COVID-19.

With lumber prices rising sharply, the National Association of Home Builders wants the Trump administration to take steps to halt or reverse the costly trend.

In an Aug. 7 letter, NAHB called on President Trump to push U.S. lumber producers to boost production and also to work toward a new trade agreement with Canada to end current tariffs on lumber imports to the U.S. Those tariffs now are about 20%, according to U.S. and Canadian industry officials.

NAHB says lumber shortages have developed and prices have shot up by 80% since the middle of April, due partly to increased demand for housing construction and more interest from do-it-yourselfers seeking to make home improvements during the pandemic.

Source

So where is the price of lumber headed next, lets go to the charts?

Monthly Chart (Curve Time Frame) - monthly demand is $200.

Weekly Chart (Trend Time Frame) – the trend is screaming up.

Daily Chart (Entry Time Frame) – the chart suggests to buy price on a pull back to the daily demand at $575.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.

Posted Using LeoFinance