Lumber prices are up 29% in February as pace of economic reopening sparks new rally in global commodities

• Lumber has surged nearly 30% so far this month in step with the wider rally in global commodities.
• Commodity prices have pointed higher amid cold winter weather and geopolitical tensions, among other factors, an expert said.

The price of lumber has risen nearly 30% so far this month, in step with the wider rally in global commodities as economies around the world reopen.

"I believe it's part of the larger move in commodities," David Russell, VP of market intelligence at online broker-dealer TradeStation, told Insider. "We have a kind of a broad shift of money toward commodities and materials in the broader market."

Russell said commodity prices — including those for iron, oil, soybeans, and fertilizer — have mostly pointed higher amid cold winter weather, geopolitical tensions, and supply chain disruptions.

After briefly cooling off in the past weeks, lumber futures rose for the sixth straight session on Wednesday, hitting $1,204.90 per thousand board feet to its highest for the month.

That's a 29% jump from February 1, when the essential building material was trading at $934.90 per thousand board feet. Still, lumber is 30% below its record high of $1,711 reached in May 2021.

Russell also attributed the recent jump in lumber to the US dollar's slide Wednesday ahead of key data on consumer prices. When the dollar weakens, general commodity prices strengthen, giving the two an inverse relationship.

Lumber prices have skyrocketed in the past year due in part to distorted supply chains during the pandemic. For instance, shipping problems from Resolute Forest Products, one of Canada's leading producers, have put lumber supply under stress.

Adding to the price pressures is an elevated focus on home building and home improvement as more Americans look to adjust to the work-from-home trend.

"Many of the same things that have caused lumber prices to rise over the last six months to a year are continuing to affect lumber prices today," Chip Setzer, director of trading and growth for Mickey Group, a commodity trading platform, told Insider. "Demand for forest and lumber products remains high and supply continues to be limited."

Michael Goodman, director of specialty products at Sherwood Lumber, agreed and added that this trend will persist in the near future.

"Between the combined extreme demand, weather, trucking, and other various supply chain issues, [lumber] continues to push the price to new highs," he told Insider. "We are only in February and seeing record months in volume. Most anticipated a slowdown due to interest rates but the heavy grind continues and will continue for some time."