Prices for low-grade lumber – the main input cost for pallets – have moved sharply higher since the start of 2026, and the Iran conflict is now adding a second layer of pressure through fuel and freight. …The first sign of this tightening is the shrinking gap between low-grade and framing lumber prices. …This slow shedding of trucking availability suggests the industry is already operating with thinner capacity and weaker margins. Now diesel prices are rising sharply as geopolitical tensions in Iran lift energy costs. …Further upstream in the pallet supply chain lie more challenges. For loggers, diesel is not just another cost, but something that could destroy their already tight margins. With product prices still weak and little room to pass higher costs along, a sustained rise in diesel increases the odds of logging cutbacks, setting the stage for tighter log supply in the second half of 2026 should the increase in diesel prices be prolonged.