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Behind Lumber’s Collapse: A Perfect Storm of Housing and Trade

(Ryan Dezember – Wall Street Journal)

Lumber futures reached a record in May that was 30% above the old all-time high set in the early 1990s. Still, lumber ended the year as one of the worst-performing commodities.

It isn’t like other commodities had a great year. The Bloomberg Commodity Index, a basket of 22 raw materials, declined 13%.

But lumber suffered an epic collapse. Since hitting $639 per 1,000 board feet on May 17, futures lost nearly half their value. Lumber ended 2018 down 26% and prices slipped further in the first trading session of 2019, settling 1.05% lower at $329 on the Chicago Mercantile Exchange on Wednesday.

A variety of factors had sent prices soaring in the first half of the year. Tariffs were placed on imports from Canada in late 2017, raising the price of much of the softwood that is used to build U.S. homes. Click here to read more.