Tags: Lumber | Futures | Sandy | Demand

Lumber Futures Hit 18-Month High as Sandy Spurs Demand Hope

Wednesday, 31 Oct 2012 12:22 PM

U.S. lumber futures rallied to an 18-month high on Wednesday as speculators bet demand will surge when the thousands of homes damaged by monster storm Sandy are rebuilt.

Trade sources said the home rebuilding process in the northeastern United States that bore the brunt of Sandy could stretch well into 2013, keeping demand for lumber strong.

The sources also said lumber mills usually reduce stocks going into the winter months when demand typically winds down, and this could hamper efforts by home-owners to quickly rebuild or repair damaged houses.

The storm, which made landfall on Monday evening and has killed at least 45 people, may cause up to $15 billion in insured losses, according to one disaster-modeling company.

"Historically, this is what happens after a natural disaster," said Michael Young, president of Pacific Futures Trading in Seattle, Washington.

Chicago Mercantile Exchange November, January and March lumber futures rose by the daily trading limit of $10 per thousand board feet and were locked at those levels to effectively shut down trading.

Benchmark January futures were $10 higher at $331.20 per tbf at 10:36 a.m. CDT (1536 GMT).

"Inventories are on the low side in part due to the seasonal trend as we get into the winter months." said Jon Anderson, president of Random Lengths, which tracks prices and trends in the lumber market, by telephone from Eugene, Oregon.

He said prices for lumber in the cash market began moving higher last week in reaction to Sandy.

Prices for western spruce in the cash market have risen 7.5 percent since last week, according to data from Random Lengths.

Traders said speculators were behind much of the buying in lumber futures as they anticipated demand to increase when people affected by Sandy begin to rebuild or repair their homes.

"There is anticipation of a big rush in demand after this storm," said a trader, who declined to be named.

The type of lumber traded at the CME is so-called framing lumber, primarily used in home building.

The optimism over demand for lumber and other home-building materials was also reflected in Home Depot, the world's largest home improvement retailer, whose shares rose 2.4 percent to $61.48 by 10:38 a.m. CDT (1538 GMT).

© 2017 Thomson/Reuters. All rights reserved.

   
1Like our page
2Share
Markets
U.S. lumber futures rallied to an 18-month high on Wednesday as speculators bet demand will surge when the thousands of homes damaged by monster storm Sandy are rebuilt.
Lumber,Futures,Sandy,Demand
368
2012-22-31
Wednesday, 31 Oct 2012 12:22 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved