What Is lumber telling us about commodity price stability?

By Andrew Hecht
Barchart
July 24, 2022
Category: Finance & Economics
Region: Canada, United States

Lumber is a wild futures market. …The explosive and implosive price action in lumber is a function of its low liquidity. …Lumber is not a trading market but a leading indicator and barometer for the industrial commodities sector. Lumber’s recent decline ushered in an overall correction in many other industrial commodities over the past weeks and months. …Copper, crude oil, and other commodities followed wood lower. …Lumber was the first commodity to plunge, leading the other raw materials. Now that it has found at least a temporary bottom at a higher low, other commodities seem to be stabilizing. …Another test for the lumber market is on the horizon this week as the Fed increases the short-term Fed Funds Rate. …If lumber can hold above the mid-June $517 low, it will send a signal to other commodities that the recent corrections could be ending. 

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