COVID-19

Lumber prices climb as people stuck at home build those gazebos they’ve been putting off

Andy Uhler Jul 10, 2020
Heard on: Marketplace
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Timber on the dock of a New Zealand port in February. Demand for lumber hasn't slowed, but production has. Phil Yeo/Getty Images
COVID-19

Lumber prices climb as people stuck at home build those gazebos they’ve been putting off

Andy Uhler Jul 10, 2020
Timber on the dock of a New Zealand port in February. Demand for lumber hasn't slowed, but production has. Phil Yeo/Getty Images
HTML EMBED:
COPY

Lumber is a commodity, kinda like soybeans. Greg Kuta, president of Westline Capital Strategies, calls his job trading lumber futures risk management.

“You quote stuff 30, 60, 90, 120 days out, and you need to quantify that risk because you’re not going to deliver that wood until the job starts to come due,” he said. “So they need to lock in the risk and quantify that risk moving forward.”

There are a couple of reasons the price of lumber is at a 2½ year high. First, hardware stores are selling a lot more of it than brokers expected, as folks stuck at home tackle those long-postponed projects. And although home construction paused for a bit in March and April, it never went away. The saw mills, however, slowed down drastically.

“You did see a decrease in production,” Kuta said. “And to bring that production back online, you don’t flip light switches. Running sawmills and turning them off and then turning them back on is a slow, laborious process,” he said.

Kuta said right now, buyers are just trying to get their hands on any lumber they can, whatever the price. 

Pete Stewart, president of the timber analytics company Forest2Market, admits that high demand for lumber will lead environmental groups to worry about deforestation. But that concern could be overstated.

“In the U.S., we’re growing 15% to 20% more trees than we are consuming, which is good for the environment, good for everything,” Stewart said.

Growing more trees also will help ensure the lumber supply is healthy when those sawmills get back to running at full steam.

COVID-19 Economy FAQs

Are states ready to roll out COVID-19 vaccines?

Claire Hannan, executive director of the nonprofit Association of Immunization Managers, which represents state health officials, said states have been making good progress in their preparations. And we could have several vaccines pretty soon. But states still need more funding, she said. Hannan doesn’t think a lack of additional funding would hold up distribution initially, but it could cause problems down the road. “It’s really worrisome that Congress may not pass funding or that there’s information circulating saying that states don’t need additional funding,” she said.

How is the service industry dealing with the return of coronavirus restrictions?

Without another round of something like the Paycheck Protection Program, which kept a lot of businesses afloat during the pandemic’s early stages, the outlook is bleak for places like restaurants. Some in the San Francisco Bay Area, for example, only got one week of indoor dining back before cases rose and restrictions went back into effect. Restaurant owners are revamping their business models in an effort to survive while waiting to see if they’ll be able to get more aid.

How are hospitals handling the nationwide surge in COVID-19 cases?

As the pandemic surges and more medical professionals themselves are coming down with COVID, nearly 1 in 5 hospitals in the country report having a critical shortage of staff, according to data from the Department of Health and Human Services. One of the knock-on effects of staff shortages is that people who have other medical needs are being asked to wait.

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