Paul Jannke

It’s been a wild ride for wood products, particularly lumber, over the past two years. …With the U.S. economy and employment growing robustly in 2021 and 2022, interest rates remaining low by historical standards, many of the supply-side constraints that held back housing over the past half-decade resolved, and high pent-up demand, we expect housing starts will continue to grow from an average of 1.584 million units in 2021 to 1.618 million in 2022. …North American softwood lumber demand is primarily driven by U.S. consumption. U.S. softwood lumber consumption rose to 50.93 BBF in 2020, and we are estimating an increase to 52.76 BBF in 2021, the highest level since 2006; and forecasting 53.87 BBF in 2022. …We expect export growth will remain weak, falling another 1.6 per cent in 2022 because of strong domestic consumption, high prices, and competition from Europe.

Lumber prices in early 2022 will be bolstered by supply constraints in the U.S. South. Capacity expansions in the U.S. South have mostly made up for British Columbia mill closures. …While we expect prices will remain elevated into early 2022, we do not expect them to get anywhere near their 2021 levels. Capacity additions in the U.S. South, relatively higher inventory levels coming into the year, and weaker residential-improvement activity will all prevent a run similar to what we saw in 2021. Moreover, we expect prices will slip in the second quarter as dealers digest the inventories they built in late 2021 and early 2022. …Ultimately, we expect lumber prices will continue to be volatile in 2022. There are a number of reasons for this, but the main one is the lingering effects of COVID-19.