I last wrote about the Chicago Mercantile Exchange’s lumber futures market on March 21. In the article “Lumber Watches the Economy While We Watch Lumber Prices,” I wrote, “Over the past weeks, the inaction in the lumber market could be a lull before a return to lower levels because of high interest rates and a weakening economy. However, if lumber heads higher, it could signal that inflation remains a clear and present danger and may lead other raw material markets that have declined to rebound.”
Since that article, the final CME random-length lumber futures contract disappeared, replaced by the new physical contract. On March 21, 2023, nearby May physical lumber futures were at the $537.50 per 1,000 board feet level. On April 26, they were lower at the $468 level. However, the smaller contract seems to be attracting more activity, which could improve the wood’s market liquidity over the coming months.
