The mountain pine beetle is taking a dramatic toll on Canadian forests which are critical for home building and other lumber needs here in the U.S.
The mountain pine beetle is taking a dramatic toll on Canadian forests which are critical for home building and other lumber needs here in the U.S. - 
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A new set of beetles is taking North America by storm. This time the casualty is lumber and lumber prices. The mountain pine beetle is taking a dramatic toll on Canadian forests which are critical for home building and other lumber needs here in the U.S.

A lumber-industry consultancy called the International Wood Markets Group has sounded the alarm in a recent report. Russell Taylor is the president, and he spoke to us from Vancouver, British Columbia, this morning.

"These very tiny beetles -- they're about the size of a grain of rice -- they basically flock to a tree and they burrow into it and lay their eggs," Taylor explained. "That basically kills the flow of water up and down the tree, and they kill everything in sight as they grow and grow and grow. It's been one of the largest natural disasters, we can think of, of all time."

Taylor noted that the beetles have ravaged the forests of British Columbia and moved all the way across the Rocky Mountains into Alberta. He said he doesn't see it slowing down in the interim, and it's already affecting prices in lumber.

"We've been actually predicting what we called a 'supercycle' in lumber, starting somewhere around now," he said. "And we're seeing it occurring and we think the peak years of 2014 and 2015, we're going to see prices literally going through the roof as the supply-side dynamics get tighter as U.S. demand and the U.S. housing market comes roaring back."

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Follow Jeff Horwich at @jeffhorwich