Something Cooking in the Lumber Market?

Our friend Tom Dyson over at DailyWealth says that something may be happening in the world of lumber, according to one of his industry sources...Tom writes:

I have an "on the ground" contact who's seeing something else altogether... Don runs a large lumber supply depot outside Orlando. Last week, he sent me a "special commodity alert."

"Over the last 30 days," he wrote, "there have been significant increases in the lumber and plywood markets."

Pine 2x10s have increased 22% in the last 30 days.
Treated pine 2x6s have increased 29%.
Pine 2x6 borates are up 31%.
Spruce 2x4s are up 37%.
Spruce 2x6s are up 44%.
15/32 Oriented Strand boards are up 7%.
15/32 Plywood is up 12%.

It looks like there's something stirring in the lumber market. It could be a local aberration in Orlando... or it could be something bigger. I'm not sure, and neither is Don.

Let's keep an eye on the Chicago futures price to see if it confirms Don's view. In the meantime, I'll hunt for more clues from lumberyards in other parts of the country...

Lumber prices are low, low, low - this is definitely something worth keeping an eye on.

PS - If you like Tom's stuff as much as I do, you may want to check out his outstanding newsletter The 12% Letter, which I read religiously myself.

More Lumber Research

Regular readers know that we're keeping an eye on developments in the lumber market, which is suffering from its lowest prices in decades. I got the idea from Tom Dyson at DailyWealth, and his follow up article earlier this week inspired me to do some more research on the subject.

If you're also intrigued by this opportunity, here are some other links you may be interested in:

• Elliott Wave International - this is really just an intro for an advertisement for their services, but has a few useful points
• Reuters on a recent lumber ruling
• Al.com (that's short for Alabama) - Sawmills whacked by falling lumber prices, little demand

Looks like any upturn in prices will be triggered by a drop in supply. We have a classic case setting up for this - prices below the cost of production, with many Canadian sawmills packing up shop as a result.

You've seen this script before over the past few years - supply is neglected due to low prices. Then demand picks up, and boom! You've got a jump in prices...and hopefully a big profit if you had the trade!

The "Big Canadian Lumber Dump"

Very interesting opportunity ahead for us, perhaps, in the lumber market.

I have not traded lumber before, but that could change once this downtrend stops. We'll keep a close eye on the lumber charts here for you.