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Raging wildfires threaten lumber market, home builders’ costs

Falling prices could reverse course as extreme weather hits supply

Fires raging in the western United States are beginning to have a negative impact on lumber output. (Getty)
Fires raging in the western United States are beginning to have a negative impact on lumber output. (Getty)

Just as lumber prices were finally falling, wildfires and extreme weather are threatening to pull them right back up.

Fires raging in the western United States are beginning to have a negative impact on lumber output. Canfor, one of the biggest lumber producers on the continent, is among the companies cutting back production in response to the weather events, according to the Wall Street Journal.

Canfor is curbing output at mills in British Columbia, where the company is struggling to move lumber to and from the company’s facilities. It expects to reduce output by around 115 million board feet in the quarter. That’s a small portion of supply on the continent, but it could be a sign of things to come.

On Wall Street, traders bid up lumber futures Wednesday by the maximum daily amount allowed. September futures rose 7.75 percent, although they are still down 66 percent since the beginning of May.

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Lumber futures were plunging just weeks ago, with home builders expecting to boost their profit margins rather than lower their prices in a hot residential market.

Extreme weather is threatening more than just lumber supply. Hydroelectric power output is also endangered by the extreme heat, and natural gas prices are at a seasonal seven-year high. And flooding forced a major metal producer in Germany to close a plant last week as copper prices soar.

[WSJ] — Holden Walter-Warner

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