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<ul><li>A rally in <keyword id="1592301" type="PERSON" weightage="60" keywordseo="lumber">lumber</keyword> prices could spark a 18% surge in shares of <keyword id="712386" type="CITY" weightage="60" keywordseo="Weyerhaeuser">Weyerhaeuser</keyword>, Bank of America said in a note on Tuesday.</li><li>BofA upgraded Weyerhaeuser to a Buy rating, arguing that its valuation has little downside.</li><li>The bank believes Weyerhaeuser could issue a special dividend of $2 per share in early 2022.</li><li id="recirc"><a href="https://newsletter.businessinsider.com/join/4np/10-things-opening-bell?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingestdium=ingest?utm_source=markets&amp;utm_medium=ingest" target="_blank" rel="noopener">Sign up here for our daily newsletter, 10 Things Before the Opening Bell</a>.</li></ul>Shares of <a href="https://markets.businessinsider.com/stocks/wy-stock">Weyerhaeuser</a> stand to rally 18% from Tuesday's close if <a href="https://markets.businessinsider.com/commodities/lumber-price">lumber prices</a> see a rebound going into year-end, <a href="https://markets.businessinsider.com/stocks/bac-stock">Bank of America</a> said in a note on Tuesday.The bank upgraded shares of the timberlands owner and sawmill operator to Buy and reiterated its $41 price target, arguing that the company's current valuation offers limited downside potential to investors."The embedded price in WY's valuation is about $286/1,000 board feet, 18% below the $350/mbf we believe is fair on a normal basis," BofA explained. On top of the valuation discount, Weyerhaeuser could issue a special dividend of $2 per share by the first quarter of 2022, the note said.Also helping offer upside potential in shares of Weyerhaeuser is a potential late summer rally in lumber prices, BofA said, <a href="https://markets.businessinsider.com/news/commodities/lumber-price-outlook-late-summer-rally-bofa-home-construction-2021-7">offering 3 reasons why the commodity could surge</a> after falling more than 70% from its May peak. Encouraging to the bank is Weyerhaeuser's stock holding steady in recent months even as lumber futures plummeted after soaring to record highs. "WY has stopped going down on bad news... this suggests the worst of the near-term price declines is in the shares," BofA said.Still, there are risks associated with Weyerhaeuser stock despite its discounted valuation relative to peers, the bank said. Those risks include weak employment, a deterioration in housing fundamentals, and adverse regulations on the tax status of REITs, among others. "While WY has its risks and tends to act more as a classical cyclical (best bought early in the cycle), we believe valuations on normalized lumber pricing are attractive given the shares' relative 14% underperformance year-to-date," BofA concluded.

Lumber prices could spark a 18% rally in Weyerhaeuser as wood valuation suggests limited downside, BofA says

<ul class="summary-list"><li><keyword id="712386" type="CITY" weightage="60" keywordseo="Weyerhaeuser">Weyerhaeuser</keyword> CEO said the sky-high price of the commodity is unsustainable, Bloomberg reported.</li><li>"I don't think $1,000 <keyword id="10881461" type="UNKNOWN" weightage="60" keywordseo="lumber-prices">lumber prices</keyword> are the new normal," CEO Devin Stockfish said.</li><li>Weyerhaeuser is America's largest <keyword id="1592301" type="PERSON" weightage="60" keywordseo="lumber">lumber</keyword> producer. It owns 11 million acres of timberland.</li></ul>Devin Stockfish, the chief executive of <a href="https://markets.businessinsider.com/stocks/wy-stock">Weyerhaeuser</a>, the largest lumber producer in the US, on Tuesday said the sky-high price of the commodity is a blip that is unsustainable."I don't think $1,000 lumber prices are the new normal," Stockfish told the <a href="https://reit.cventevents.com/event/9ac7b1ee-9a29-4267-90e9-9084f918d0f0/summary">Nareit REITweek 2021 Investor Conference</a>, <a href="https://www.bloomberg.com/news/articles/2021-06-08/bitcoin-drops-more-than-5-in-renewed-cryptocurrency-selloff">Bloomberg</a> reported.He continued: "With that being said, when you think about the amount of housing we're going to have to build in the U.S. over the next three, five, 10 years, that's just a significant amount of demand for wood products."<a href="https://markets.businessinsider.com/commodities/lumber-price?utm_source=markets&amp;utm_medium=ingestgest" target="_blank" rel="noopener">Lumber</a> prices have <a href="https://markets.businessinsider.com/currencies/news/bitcoin-price-crash-btc-behind-lumber-copper-dow-jones-sp500-2021-6-1030502810">soared in the past year as housing markets around the world boomed</a> during the coronavirus pandemic, with the random-length price rising around 40% in 2021. Lumber stood at over $1,168 per 1,000 board feet on Tuesday afternoon."We're going to continue to look for timberland opportunities," Stockfish said. "Every deal that comes to market, we're looking at, so I would expect us to continue to be active on that front."The Seattle-based company owns 11 million acres of timberland in the US.Shares of Weyerhaeuser closed lower on Tuesday by 0.36%, at $35.57.

The CEO of the largest US lumber producer says that the commodity's sky-high price is not the new normal, even as he foresees sustained demand over the next decade

<ul class="summary-list"><li>Spot <keyword id="10881461" type="UNKNOWN" weightage="60" keywordseo="lumber-prices">lumber prices</keyword> hit a record high of nearly $1200 per thousand board feet on Tuesday.</li><li>Prices have soared more than 250% in the past year alone.</li><li>Rising <keyword id="1592301" type="PERSON" weightage="60" keywordseo="lumber">lumber</keyword> costs added more than $24,000 to the price of the average new single-family home. </li></ul>Spot <a href="https://markets.businessinsider.com/commodities/lumber-price">lumber prices</a> hit a record high of nearly $1200 per thousand board feet on Tuesday.The record mark comes after a historic run for lumber in 2020 and the beginning of 2021. Prices have soared more than 250% in the past year and roughly 348% from March 30, 2020 five-year lows.The rising lumber costs have added more than $24,000 to the price of the average new single-family home, and nearly $9,000 to the price of a multifamily home in the past year alone, according to <a href="https://www.nahb.org/advocacy/top-priorities/material-costs/solving-the-lumber-crisis">data from the National Association of Homebuilders</a>.Sales of newly built, single-family homes also fell 18.2% in February, partly due to lumber costs, according to <a href="https://www.census.gov/construction/nrs/pdf/newressales.pdf">newly released data</a> from the US Department of Housing and Urban Development and the Census Bureau.Lumber's rise hasn't been all bad news for the <keyword id="31671" type="CITY" weightage="100" keywordseo="markets">markets</keyword>, however. As a result of rising lumber prices, shares of <keyword id="519627" type="PERSON" weightage="60" keywordseo="timber">timber</keyword> companies have surged in the past six months.Vancouver-based <a href="https://markets.businessinsider.com/stocks/cfpzf-stock">Canfor</a> saw its stock jump some 107% during the period while shares of <a href="https://markets.businessinsider.com/stocks/wfg-stock">West Fraser Timber</a> and <a href="https://markets.businessinsider.com/stocks/wy-stock">Weyerhaeuser</a> jumped roughly 80% and 30%, respectively.A number of factors have combined to create the perfect storm for rising lumber prices over the past few years, starting in 2019 when weak demand and severe weather conditions caused timber suppliers to close mills and reduce output."In North America, lumber demand was impacted by severe weather early in 2019...tepid demand, combined with excess inventory levels heading into 2019, resulted in significant downward pricing pressure throughout most of the year," <keyword id="4815222" type="PERSON" weightage="60" keywordseo="canfor">Canfor</keyword>'s management wrote in a <a href="https://www.canfor.com/docs/default-source/investor-relations/2019_cfp_mda_final.pdf?sfvrsn=42f6ee91_2">2019 statement to investors.</a>"In response to the muted demand and elevated log costs in BC, a number of temporary and permanent sawmill curtailments were announced across the industry throughout 2019," management added.Then in 2020, interest rates were cut and demand for new homes and lumber soared due to the new stay-at-home dynamic. A plague of pine beetles in British Columbia also destroyed enough trees to build millions of single-family homes throughout the year, <a href="https://www.bloomberg.com/news/features/2020-08-17/mountain-pine-beetle-infestations-are-killing-forests-could-worsen-emissions">Bloomberg reported</a>.All of this led to a supply and demand imbalance which has caused a sustained rise in lumber costs.Devin Stockfish, the CEO of <keyword id="712386" type="CITY" weightage="60" keywordseo="Weyerhaeuser">Weyerhaeuser</keyword>, said last month he expects lumber prices will remain elevated "for the foreseeable future," per Bloomberg.The National Association of Homebuilders has been pressing the Biden administration, federal agencies, and Congress to step in and address lumber supply shortages.The association sent <a href="https://www.nahb.org/-/media/NAHB/advocacy/docs/top-priorities/lumber/lumber-letter-to-biden-from-fowke.pdf">a letter</a> to President Biden in late January after his election and has since lobbied Congress, Agriculture Secretary Tom Vilsack, and the US Forest Service in hopes of breaking the lumber pricing trend. So far though their efforts haven't been fruitful and lumber prices continue to rise.Read more: <a href="https://www.businessinsider.com/joel-greenblatt-shares-strategy-for-retail-investors-to-win-markets-2021-4" target="_blank" rel="noopener">Investing legend Joel Greenblatt averaged 50% annual returns over 10 years. He told us his strategy for individual investors to find 'creative' opportunities in an increasingly crowded and ever-changing market.</a>

Lumber prices hit a record high after soaring more than 250% in the past year

<ul class="summary-list"><li>Weyerhaeuser CEO Devin Stockfish said home-improvement projects are a key driver of <keyword id="10881461" type="UNKNOWN" weightage="60" keywordseo="lumber-prices">lumber prices</keyword>.</li><li>Lumber prices have fallen from May's record highs, but experts say they will stay elevated for several years.</li><li>A truck-driver shortage is also threatening to push prices even higher.</li></ul>The CEO of Weyerhaeuser, one of the world's largest private owners of timberland, said the housing boom is not the only reason lumber prices are soaring - a surge in home-improvement projects is also driving the market.While lumber prices have fallen back from <a href="https://markets.businessinsider.com/news/stocks/lumber-price-outlook-futures-shortage-demand-commodity-inflation-2021-6-1030537230">May's record high of $1,700</a> per thousand board feet, <a href="https://markets.businessinsider.com/commodities/news/lumber-prices-bottom-market-futures-stinson-dean-elevated-supply-demand-2021-6-1030556454">commodity experts anticipate the home-building product to trade above $1,000</a> (well above the $400 historical average) for the next three to five years. Weyerhaeuser CEO Devin Stockfish <a href="https://time.com/6074527/weyerhaeuser-devin-stockfish-housing-boom-inflation-climate-change/">recently told TIME</a> that home repair and remodeling projects will continue to keep lumber prices elevated.Though the <a href="https://markets.businessinsider.com/news/stocks/2021-housing-market-shaping-up-to-be-even-hotter-than-2020-1030038702">red-hot housing market</a> has largely been credited with driving lumber prices,<a href="https://www.businessinsider.com/us-housing-shortage-nearly-4-million-homes-fannie-mac-data-2021-4"> a shortage of nearly 4 million US homes</a> has had a <a href="https://www.businessinsider.com/home-improvement-products-prices-house-building-project-quotes-increase-expensive-2021-5">ripple effect on the home-improvement market,</a> as more people look to <a href="https://www.businessinsider.com/home-improvement-projects-face-months-delays-rising-prices-lumber-costs-2021-5">update their homes without the option of buying a new one.</a>"Repair/remodel is actually also a very big driver, from do-it-yourself folks buying wood at <keyword id="201254" type="COMPANY" weightage="60" keywordseo="Home-Depot">Home Depot</keyword> to all these people that have old houses," Stockfish told Time. 'They want a new office, they want a new kitchen." The CEO said the pandemic underscored the importance of home life, driving many people to renovate their work-from-home space.At the same time, many aging baby boomers are choosing to remodel their homes instead of moving into retirement homes. Earlier this year, <a href="https://www.cnbc.com/2021/04/13/op-ed-more-boomers-are-choosing-to-upsize-their-homes-in-retirement.html">a Merrill Lynch and Age Wave retirement study</a> found that many people between the ages of 50 and 60 are bucking the retirement trend of downsizing or moving into a retirement home in favor of remodeling or purchasing a larger house."There just became a whole new appreciation for the value of a home," Stockfish said.The CEO, whose company is responsible for over 12 million acres of timberland in the US as well as about 14 million in Canada, said the <a href="https://www.businessinsider.com/us-labor-shortage-workers-hiring-chamber-commerce-jobs-emergency-2021-6">US labor shortage</a> is also an ongoing concern for the industry."That's something we'll be keeping a pretty close eye on," Stockfish said. "We haven't had it get to the point where it's really impacting our production, but one of the things that's a little bit of a leading indicator that we're watching closely is when we advertise for roles, the applicant pool has been down quite a bit versus what it has been historically." The <a href="https://www.businessinsider.com/us-labor-shortage-workers-hiring-chamber-commerce-jobs-emergency-2021-6">labor shortage hit the trucking industry hard this year</a>, as the pandemic triggered a surge in online shopping. The shortage has helped exacerbate massive shipping delays as well as push transportation costs to new highs, as <a href="https://www.businessinsider.com/cargo-ships-waiting-to-dock-california-contributes-supply-chain-crisis-2021-4">shipping containers wait outside key US ports for weeks to unload.</a> Earlier this month, <a href="https://www.businessinsider.com/truckers-pay-hike-salary-truck-driver-shortage-2021-6#:~:text=Driver%20scarcity%20and%20staggering%20e,transport%20their%20goods%20via%20truck.">Insider's Kate Duffy reported</a> that some trucking companies have nearly doubled pay in an attempt to lure in more drivers.<a href="https://time.com/6074527/weyerhaeuser-devin-stockfish-housing-boom-inflation-climate-change/">Read the full interview with Stockfish at TIME's website.</a>Are you facing a supply shortage impacting a home-improvement project? Reach out to the reporter at gkay@insider.com.

It's not just housing shortages. A lumber CEO says a boom in DIY projects is also driving up demand for the building material.

<a href="https://markets.businessinsider.com/commodities/lumber-price"></a><ul class="summary-list"><li><keyword id="9640833" type="UNKNOWN" weightage="60" keywordseo="lumber-futures">Lumber futures</keyword> fell over 5% to trade at $1,059 per thousand board feet on Friday.</li><li>Prices for the hot commodity are now down roughly 37% from May 7 record highs.</li><li>Weyerhaeuser's CEO said $1000 <keyword id="10881461" type="UNKNOWN" weightage="60" keywordseo="lumber-prices">lumber prices</keyword> aren't likely to continue at the 2021 Nareit conference.</li></ul><a href="https://markets.businessinsider.com/commodities/lumber-price">Lumber prices</a> fell for the eighth straight day on Friday to near $1,000 per thousand board feet for the first time since March in a reprieve for ailing homebuilders and renovators.<keyword id="1592301" type="PERSON" weightage="60" keywordseo="lumber">Lumber</keyword> futures fell 5.61% to trade at $1,059.20 per thousand board feet on Friday. Rising lumber prices in 2021 have hit homebuilders, buyers, and renovators hard, pushing up the cost of an average single-family home by some $36,000, according to the <a href="https://www.nahb.org/advocacy/top-priorities/material-costs/solving-the-lumber-crisis">National Association of Homebuilders.</a>Lately, though, lumber has fallen back down to Earth as the historic rise appears unsustainable-prices are now down roughly 37% from their May 7 peak of $1670.50 per thousand board feet.Devin Stockfish, the CEO of Weyerhaeuser, one of the world's largest private owners of timberland, said <a href="https://www.businessinsider.com/lumber-price-today-not-new-normal-weyerhaeuser-ceo-devin-stockfish-2021-6">lumber prices over $1,000 aren't likely to continue</a> in the near term at a recent Nareit conference. The CEO added that he believes the home-building and renovation boom could lead to strong wood demand for another decade, however."I don't think $1,000 lumber prices are the new normal," Stockfish told the Nareit REITweek 2021 Investor Conference. "With that being said, when you think about the amount of housing we're going to have to build in the U.S. over the next three, five, 10 years, that's a significant amount of demand for wood products."Capital Economics <keyword id="35149" type="PERSON" weightage="60" keywordseo="commodities">commodities</keyword> analyst Samuel Burman said in an April note to clients, <a href="https://www.bloomberg.com/news/articles/2021-04-20/sky-high-lumber-prices-to-drop-by-year-end-analyst-says">per Bloomberg</a>, that he expected lumber prices to fall to $600 even as demand for the commodity remains strong due to rising supply."Even though we expect lumber demand to hold up well for some time, we still think that a rebound in supply will lead to a sharp fall in the price of U.S. lumber over the next eighteen months," Burman wrote.Read more: <a href="https://www.businessinsider.com/why-lumber-prices-futures-surge-is-ominous-veteran-pm-explains-2021-5" target="_blank" rel="noopener">'If lumber crashes, stocks might be next': An award-winning portfolio manager who's tracked lumber prices for years breaks down why futures hitting a record high of $1,600 is an ominous sign - and shares what investors can do ahead of the eventual crash</a>To Burman's point, a number of timber companies have announced expansions over the past few months due to continued demand for lumber.<a href="https://markets.businessinsider.com/stocks/wfg-stock">West Fraser Timber</a> recently announced expansions at five US mills, while rival <a href="https://markets.businessinsider.com/stocks/rfp-stock">Resolute Forest Products</a> revealed a $50 million bet on "high-return and quick payback" modernization and capacity expansion lumber projects in Quebec, Ontario, and the southeast US.<a href="https://markets.businessinsider.com/stocks/cfpzf-stock">Canfor</a> has also said it will invest around $160 million in a new sawmill in Louisiana.Rising supply could be helping to quash unsustainable pricing in lumber that has been driving builders to look for <a href="https://www.1011now.com/2021/05/24/lincoln-construction-crews-use-lumber-alternative-as-demand-skyrockets/">alternative materials</a>, fueling <a href="https://news.crunchbase.com/news/shortages-of-construction-material-and-skilled-labor-fueling-growth-in-modular-homebuilding/">modular home building</a>, and even bringing <a href="https://komonews.com/news/local/lumber-yards-construction-sites-targeted-by-thieves-trying-to-cash-in-on-high-demand">thieves to construction yards</a>.

Lumber prices fall for the 8th straight day to near $1,000 per thousand board feet for the first time since March

<ul class="summary-list"><li><keyword id="9640833" type="UNKNOWN" weightage="60" keywordseo="lumber-futures">Lumber futures</keyword> fell as low as $944 per thousand board feet on Tuesday.</li><li>A recovery helped the commodity avoid its 10th straight down day.</li><li>Experts predict <keyword id="1592301" type="PERSON" weightage="60" keywordseo="lumber">lumber</keyword>'s price will remain elevated from historic norms.</li></ul><a href="https://markets.businessinsider.com/commodities/lumber-price">Lumber prices</a> slid again on Tuesday before mounting a recovery as the pandemic-driven boom in the commodity continues to show signs of weakness.Specifically, lumber futures fell as low as $944 per thousand board feet on Tuesday before recovering above $1000. The recovery helped lumber avoid the 10th straight down day for the hot commodity.Lumber's recent rise has been so dramatic that prices are up roughly 170% since this time last year even with the recent down trend.Kunal Lunawat, co-founder and managing partner at Agya Ventures, a real estate technology fund, said that lumber's rise was a result of the pandemic and low-interest rates, which caused many builders to hoard supplies anticipating a surge in construction."This created a classic demand-supply mismatch," Lunawat told Insider."While the current prices are unsustainable, in general, one can expect <keyword id="10881461" type="UNKNOWN" weightage="60" keywordseo="lumber-prices">lumber prices</keyword> to trend upwards. This is purely predicated on the demand for housing in the US and the amount of stock coming to the market over the next decade," he added.Mike Wisnefski, a former lumber trader and chief executive of the online marketplace MaterialsXchange, told the <a href="https://www.wsj.com/articles/lumber-prices-are-falling-fast-turning-hoarders-into-sellers-11623749401">Wall Street Journal</a> that "everyone was buying more than they needed" due to a "fear of lack of availability."Now, Wisnefski says shadow inventory is flooding the market as businesses that are typically buyers sell from their own stockpiles, leading to a dramatic drop in prices.Over the long term, however, experts seem to agree lumber will remain elevated from historic norms.Devin Stockfish, the CEO of one of the largest lumber producers, <a href="https://markets.businessinsider.com/stocks/wy-stock">Weyerhaeuser</a>, told investors at a conference last week that he doesn't think <a href="https://markets.businessinsider.com/news/stocks/lumber-price-today-not-new-normal-weyerhaeuser-ceo-devin-stockfish-2021-6-1030505376">$1,000 lumber prices</a> are "the new normal."However, Stockfish added:"When you think about the amount of housing that we're going to have to build in the U.S. over the next three, five, 10 years, that's just a significant amount of demand for wood products."Stockfish said that his company will continue to look for timberland opportunities to meet the strong demand, saying the firm will be "active on that front."Kyle Little, Sherwood Lumber's chief operating officer, told <a href="https://www.foxbusiness.com/markets/sherwood-lumber-coo-explains-whats-driving-inevitable-decline-of-lumber-prices">FOX Business</a> on Tuesday that "ultimately this decline was very much inevitable.""When you have over a 400% price move in about a 15-month period of time, the volatility involved with that will lead to price adjustments like we are experiencing right now," Little said.The CEO concluded by saying that based on his team's analysis, they believe "we are midway through the cycle and lumber as a whole is going to trade at more than double its historical norms for the foreseeable future."

Lumber prices reverse early slide, but pandemic-driven boom shows signs of weakness

<ul class="summary-list"><li><keyword id="9640833" type="UNKNOWN" weightage="60" keywordseo="lumber-futures">Lumber futures</keyword> and spot prices fell for the fifth straight day on Friday.</li><li>Futures are trading around $1400 per thousand board feet while spot prices are hovering around $1550.</li><li>Spot <keyword id="1592301" type="PERSON" weightage="60" keywordseo="lumber">lumber</keyword> prices are still up roughly 78% since the start of 2021.</li></ul>Lumber futures fell for the fifth straight day on Friday in the longest losing streak for the commodity in 2021.The fall brings a reprieve for home builders who have been <a href="https://www.businessinsider.com/why-is-lumber-so-expensive-homebuilding-real-estate-newbuild-inventory-2021-3">struggling with surging commodity prices</a> for over a year now.From <a href="https://markets.businessinsider.com/news/stocks/corn-copper-lumber-wheat-price-commodities-have-surged-2021-inflation-2021-5-1030397643">corn to copper</a>, a number of <keyword id="35149" type="PERSON" weightage="60" keywordseo="commodities">commodities</keyword> have been on fire since last year, but none more than lumber. Lumber spot prices are up roughly 78% since the start of 2021 and more than 350% in the past year.Prices have risen so substantially that <a href="https://www.theguardian.com/environment/2021/may/13/tree-poaching-hits-canada-amid-lumber-shortage">the Guardian reported</a> incidents of poachers clearing valuable trees from Western Canadian forests in hopes of making a quick profit.<a href="https://www.bloomberg.com/quote/LB1:COM">Lumber futures</a> reached a record high of $1,670.50 per thousand board feet last Friday while lumber <a href="https://markets.businessinsider.com/commodities/lumber-price'#39;">spot prices</a> traded as high as $1,686 per thousand board feet.This Friday, futures dropped to around $1,400 per thousand board feet while spot prices are trading around $1,550.<keyword id="11207904" type="UNKNOWN" weightage="60" keywordseo="lumber-stocks">Lumber stocks</keyword>, which have been on a bull run since mid-2020, are seeing a mild sell-off as a result.Shares of <a href="https://markets.businessinsider.com/stocks/wfg-stock">West Fraser Timber</a> are down roughly 9% this past week, while shares of <a href="https://markets.businessinsider.com/stocks/wy-stock">Weyerhaeuser</a> and <a href="https://markets.businessinsider.com/stocks/cfpzf-stock">Canfor</a> are down 3% and 5%, respectively. Read more: <a href="https://www.businessinsider.com/why-lumber-prices-futures-surge-is-ominous-veteran-pm-explains-2021-5" target="_blank" rel="noopener">'If lumber crashes, stocks might be next': An award-winning portfolio manager who's tracked lumber prices for years breaks down why futures hitting a record high of $1,600 is an ominous sign - and shares what investors can do ahead of the eventual crash</a>Falling lumber prices should help relieve some pressure from home builders and renovators who have been unable to keep pace with rising demand due to high costs for raw goods and labor.According to the National Association of Home Builders, the unprecedented spike in lumber prices has pushed the average price of a new single-family home up nearly $36,000 since April of last year.Rising commodity prices have led some to fear the potential <a href="https://www.businessinsider.com/what-is-inflation-runaway-hyperinflation-price-growth-interest-rates-fed-2021-5">impact of inflation</a>, but with lumber prices coming back to earth, Fed chair Jerome Powell's comments about <a href="https://www.businessinsider.com/fed-keeps-key-rate-near-zero-sees-inflation-as-transitory-2021-4">"transitory" inflation</a> have gained some support.A <a href="https://www.businessinsider.com/april-inflation-surge-likely-fade-economic-recovery-reopening-fed-economists-2021-5">number of economists</a> have said inflation will likely fall back down to around 2% as the year goes on and supply/demand imbalances brought about by the pandemic dissipate.Inflation, as measured by the Consumer Price Index, rose 4.2% over the last 12 months, <a href="https://www.bls.gov/cpi/">April data</a> revealed, the sharpest increase since 2008.

Lumber prices fall for a 5th straight day in a reprieve for surging commodity prices

<ul class="summary-list"><li>The price of US <keyword id="9640833" type="UNKNOWN" weightage="60" keywordseo="lumber-futures">lumber futures</keyword> has pulled back from May's peak, falling roughly 43% as of mid-June.</li><li>Experts told Insider that it could go down to $600 in the next six months.</li><li>Still, the <keyword id="10881460" type="UNKNOWN" weightage="60" keywordseo="lumber-shortage">lumber shortage</keyword> will not be easily remedied, and inflationary pressures remain a concern. </li></ul>The price of <a href="https://markets.businessinsider.com/commodities/lumber-price?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingestedium=ingest">US lumber futures</a> has pulled back since it peaked at $1,700 per thousand board feet in late May, falling roughly 43% as of mid-June.The red-hot commodity has been on a rapid decline the past few days, although prices remain elevated, up by 139% over the last year, making it one of the best-performing commodities in that period. Cash <keyword id="10881461" type="UNKNOWN" weightage="60" keywordseo="lumber-prices">lumber prices</keyword> are also tumbling. Experts, such as Drew Horter, president and CIO of Tactical Fund Advisors, welcomed the downturn. He said <keyword id="1592301" type="PERSON" weightage="60" keywordseo="lumber">lumber</keyword> may tumble to $600 per thousand board feet in the next six months."You can't keep building at this pace," he said. "There is also a domino effect to a certain extent."Chip Setzer, director of trading and growth for Mickey Group, a commodity trading platform, agreed. He said $600 is likely a fair valuation. In fact, he doesn't believe that lumber's price should return to its pre-pandemic level."Everybody kind of wins if we stay in that range," he said, adding that lumber's price can even go as high as $900. "I think that is a range for a very sustainable and healthy construction market, producing lumber market, exporting market. You kind of want all those things in harmony."Setzer, who has been in the lumber industry for 12 years, said this will give sawmill operators, truck drivers, and other players in the industry more cushion for capital upgrades and operational improvements.Among the drivers of the lumber's recent slump is the decline in both <a href="https://fred.stlouisfed.org/series/HOUST" target="_blank" rel="noopener">new home construction</a> and <a href="https://fred.stlouisfed.org/series/RSBMGESD" target="_blank" rel="noopener">home-improvement sales</a> from their record-highs earlier this year. Producers also seem to be catching up to a certain extent, largely incentivized by the sky-high prices of the commodity."The purchasing is kind of inelastic, in which people are unwilling or unable to continue to buy. So we seem to have topped out, and I think that's related to why lumber has now declined," Mace McCain, president and managing director at Frost Investment Advisors, told Insider.But for the time being, experts seem to agree that lumber prices will remain elevated from historic norms.The upsurge in lumber's prices was triggered by a <a href="https://markets.businessinsider.com/news/stocks/6-reasons-lumber-prices-soaring-demand-wont-die-down-soon-2021-5-1030452667">confluence of factors:</a> a pandemic, concerns over a looming housing crash, and millennials reaching home-buying age. Lumber at the start of 2020 was hovering just around the $400-level. Even Devin Stockfish, the CEO of <a href="https://markets.businessinsider.com/stocks/wy-stock?utm_source=markets&amp;utm_medium=ingestgest" target="_blank" rel="noopener">Weyerhaeuser</a>, the largest lumber producer in the US, said the price of the commodity will <a href="https://markets.businessinsider.com/news/stocks/lumber-price-today-not-new-normal-weyerhaeuser-ceo-devin-stockfish-2021-6-1030505376">not be the "new normal.</a>" However, there was already a shortage of lumber supply before the pandemic. "Inventories were down 33%," McCain said. "And then the surge of the housing production, which increased demand by 14%. So we got two big imbalance happened very quickly."Horter explained that the root of the issue is in the industry's infrastructure, or the lack thereof. "You don't just start up a mill at the snap of a finger," he said, adding that building a new sawmill takes at least two years. "This is a supply chain problem."Looking at the bigger picture, commodities in general typically spike when <keyword id="22195" type="COMPANY" weightage="60" keywordseo="Inflation">inflation</keyword> is accelerating, though concerns eased as commodity futures from <a href="https://markets.businessinsider.com/commodities/copper-price?utm_source=markets&amp;utm_medium=ingestgest" target="_blank" rel="noopener">copper</a> to <a href="https://markets.businessinsider.com/commodities/nickel-price?utm_source=markets&amp;utm_medium=ingestgest" target="_blank" rel="noopener">nickel</a> cooled. Commodity prices are often taken as a barometer of wider forces in the economy.Federal Reserve chair Jerome Powell on Wednesday pointed to <a href="https://markets.businessinsider.com/news/stocks/lumber-prices-today-continue-slide-as-pandemic-boom-wanes-2021-6-1030525323?utm_source=markets&amp;utm_medium=ingestgest" target="_blank" rel="noopener">lumber's falling prices</a> to back up the central bank's claim that <a href="https://markets.businessinsider.com/news/stocks/lumber-prices-falling-fed-chair-powellinflation-temporary-used-car-futures-2021-6-1030532540">inflation will be temporary</a>.Still, Ed Egilinsky, managing director at Direxion, told Insider that the economy is just in the "early innings in the supercycle of the commodities." "We are going to have volatility," he said. "We haven't had inflation in a long time. Commodities are cyclical. We are coming from a 10-year cycle that has been a malaise."Despite most of the commodities rising alongside lumber, Horter said it makes sense why special attention is being paid to lumber."Lumber is so prevalent in everybody's life. That's why people care more about it than any other commodity other than probably gas or a new car used car or a new car."

Lumber prices are cooling after rallying over 400% in 12 months. Here is where 4 experts say the red-hot commodity goes from here.

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><a href="http://pictures.reuters.com/C.aspx?VP3=SearchResult&amp;ALID=2C0FQEZ8G4HP&amp;RW=1344&amp;RH=850#/SearchResult&amp;ALID=2C0FQEZ8G4HP&amp;RW=1344&amp;RH=850&amp;VBID=2C0FC0JX620&amp;POPUPPN=4&amp;POPUPIID=2C0FQEZSUY8N">Reuters/Brendan McDermid</a>Rabbis gather to pose for a group photo in front of the Chabad-Lubavitch world headquarters in the Brooklyn borough of New York.</div></div></div>Here is what you need to know.<a href="http://www.cnbc.com/2015/11/07/chinas-trade-drops-well-below-expectations-in-october.html">China's trade surplus hit a record high</a>. China's trade surplus widened to a record $61.64 billion in October, but that was shy of the $64.75 billion surplus that was expected. Exports slumped 6.9% versus last year and imports tumbled 18.8%. Both numbers missed estimates. China's yuan ended weaker by 0.1% at 6.3625 per dollar.<a href="http://www.businessinsider.com/saudi-arabia-has-no-plans-to-cut-oil-production-2015-11?r=UK&amp;IR=T">Saudi Arabia won't cut production</a>. Khalid A. Al-Falih the chairman of Saudi Arabia's state-run oil company, Saudi Aramco, told the Financial Times, it has no plans to cut production. "The only thing to do now is to let the market do its job," he said. West Texas Intermediate crude oil is stronger by 0.9% at $44.66 per dollar.<a href="http://news.yahoo.com/catalonia-parliament-vote-secession-rest-spain-050236407.html">Catalonia has approved a plan for succession from Spain</a>. Catalonia's parliament voted 72 to 63 to develop a road map towards independence from Spain by 2017. Spanish prime minister Mariano Rajoy has previously declared he would take legal action against Catalan parliament if succession was approved, the Associated Press noted. Spain's 10-year yield is up 7 basis points at 1.98%.<a href="http://www.businessinsider.com/portugal-left-wing-coalition-set-to-unseat-minority-centre-right-government-2015-11?r=UK&amp;IR=T">Portugal's left is nearing an alliance</a>. Portugal's center-right government's two and a half-week reign appears to be coming to an end at the expense of the far left. Tuesday, the left is expected to table a rejection motion to the government, and if passed the government must resign. Portugal's 10-year yield is up 20 basis points at 2.85%, and at its highest level in four months.<a href="http://www.bloomberg.com/news/articles/2015-11-08/apache-said-to-get-takeover-approach-for-18-billion-oil-company">Apache has been approached about a takeover</a>. Oil and gas giant Apache has received an unsolicited $18 billion takeover from an unidentified company, Bloomberg reports. The reported offer was made a few weeks ago, but it's unclear whether or not talks will continue, an unidentified source told Bloomberg. Shares of Apache are up more than 2% in German trade.<a href="http://www.businessinsider.com/r-weyerhaeuser-to-buy-plum-creek-creating-23-billion-timber-company-2015-11">Weyerhaeuser is buying a rival</a>. Timber giant Weyerhaeuser has agreed to buy rival Plum Creek for about $8.4 billion in stock stock. The deal will pay Timber Creek shareholders 1.60 Weyerhaeuser shares per Plum Creek share, about a 13.8% premium from Friday's closing price, according to a Reuters report. A combination would create a $23 billion lumber behemoth.<a href="http://www.wsj.com/articles/general-electric-to-sell-australian-commercial-lending-business-1447060578">GE is selling more assets</a>. The Wall Street Journal reports, General Electric has agreed to sell its Australian commercial lending business to Sankaty Advisors, the global credit affiliate of Bain Capital, for $1.34 billion, including debt."We continue to make strong progress in our efforts to reduce the size of GE Capital. To date, we have signed agreements to sell approximately US$128 billion of GE Capital, more than 60 percent of our overall plan," said Keith Sherin, GE Capital's chairman and chief executive. Earlier this year, the company pledged to sell or spin-off $500 billion worth of global financial assets.<a href="http://www.businessinsider.com/berkshire-hathaway-q3-earnings-2015-11">Berkshire Hathaway topped estimates</a>. The conglomerate headed by Warren Buffett announced earnings of $2,769 per share, topping the $2,271 that was expected by the Bloomberg consensus. In addition, Berkshire announced its net income doubled to a record $9.43 billion thanks to its Kraft Heinz holding, which is bought in 2013 for $28 billion. Stock markets around the world trade mixed. Japan's Nikkei (+2%) led the way in Asia and France's CAC (-0.4%) paces the decline in Europe. S&amp;P 500 futures are down 7.25 points at 2086.50. Additionally, the US 10-year yield is up 3 basis points at 2.35%, a three and a half-month high.Earnings reporting remains heavy. Dean Foods, Dish Network and Hertz Global are among the names reporting before the opening bell. Caesar's Entertainment and Jazz Pharmaceuticals highlight the names releasing their quarterly results after markets close. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/october-jobs-report-rate-hike-employment-unemployment-fed-2015-11">The killer jobs report could mean a rate hike in December </a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="NpZTZveDr5kj9fJjDyZxGtBo86FNesmZ" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

You Searched For "Weyerhaeuser" and got 10 results

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