Tiff Macklem
The Bank of Canada cut its benchmark interest rate by 50 basis points for the second consecutive decision on Wednesday, and signalled Canadians should expect a “more gradual” easing of rates going forward. …The Bank of Canada’s decision to reduce its benchmark rate by a jumbo-sized cut was driven by data showing inflation at 2%, the economy in excess supply, and softer growth than previously forecast is expected. It also notes that the unemployment rate jumped to 6.8% in November, as job growth came in at a slower pace than population growth. …The central bank flagged “a number of policy measures” that have been recently announced that will affect the outlook for near-term growth and inflation, including the possibility of hefty tariffs on Canadian exports to the United States. …Most of Canada’s biggest banks reduced their prime rates Wednesday afternoon… from 5.95% to 5.45%. The new rates are effective Dec. 12.
Canada’s central bank has cut interest rates for the fifth consecutive time as the country’s economy grows at a slower rate than projected. The 50-basis-point cut comes Canada’s economy grew by one per cent in the third quarter of 2024, and the fourth quarter is looking weaker than projected, according to the Bank of Canada. “Monetary policy no longer needs to be clearly in restrictive territory,” said Bank of Canada governor Tiff Macklem. Macklem noted consumer spending and housing activity both picked up as a result of lower interest rates. Another factor in cutting the interest rate was Canada’s unemployment rate rising to 6.8% in November as the bank says the number of people looking for work has increased faster than the number of jobs. …In making its decision, the bank cited the incoming U.S. administration and the threat of 25% tariffs on Canadian exports to the U.S., adding increased uncertainty and clouding the economic outlook.
Lumber prices dropped below $570 per thousand board feet in December, marking a near one-month low, driven by strong supply and subdued demand. Rising production in the U.S., which is becoming more self-sufficient, has boosted supply, particularly in the U.S. South. While sawmill closures in Canada have had some impact, they have not significantly curtailed overall supply. Additionally, U.S. building permits continued their decline in October, dropping 0.6% following a 3.1% decrease the previous month, while housing starts fell 3.1%, missing expectations. Broader trends suggest ongoing challenges, including a rise in new home inventory, adding to over supply. Still, the potential impact of President-elect Trump’s proposed tariffs on Canadian lumber exports remains uncertain.
Re: Trump’s announcement of 25% tariffs on Canada and Mexico. …While the announcement garnered much attention, few traders considered the threat credible, and the industry as a whole took a wait-and-see approach to the news. In Western S-P-F, upward price momentum paused as the US holiday approached. Buyers had an easier time covering immediate needs, and declined to extend inventories, especially in spots where winter weather had settled in. Lumber futures was little changed in early trading. Buyers across the South lacked urgency amid abundant supplies of most items. Downward price pressure was unabated. Many veteran traders noted that the price spread between Southern Pine and Western S-P-F was the widest they had seen in their careers and expressed surprise that species substitution was not more prevalent. In Coast markets, upward price momentum and tight supplies kept prices trending higher in uneventful trading. 
President-elect Donald Trump has vowed to impose sweeping new tariffs on imports, leading his critics to argue that the plan will raise prices and spur inflation. …Nearly 10% of building materials used in residential construction are imported, according to the NAHB… and Canada probably accounts for the bulk of those imports. “Any tariffs that raise the cost of building products will have a detrimental effect on housing affordability,” says NAHB CEO Jim Tobin. ….A steep tariff on Canadian lumber would likely hit homebuilders the hardest—and could raise the prices of new homes, at least temporarily. But observers are skeptical that Trump would impose a steep, immediate tariff on such a fundamental raw material imported from a close ally. NAR’s Chief Economist Lawrence Yun said that it’s possible any tariff on lumber could be imposed over a ramp-up period to allow U.S. timber mills to boost production.
OTTAWA – Canada’s annual inflation rate accelerated more than expected to 2% in October as gas prices fell less than the previous month, data showed on Tuesday, shrinking market bets for a bigger rate cut next month. Analysts polled by Reuters had forecast the inflation rate would speed up to 1.9% from 1.6% in September. In August, the annual rate was 2%. It was the first pick-up in the annual inflation rate since May. The central bank forecasts consumer price inflation to be 2.5% this year and 2.2% next year. …This was the last inflation data to be released ahead of the Bank of Canada’s interest rate announcement on Dec. 11, and currency markets now see around a 28% chance of a 50 basis point rate cut, down from 37% before the CPI data release.
VANCOUVER, BC — Conifex Timber reported results for the third quarter ended September 30, 2024. EBITDA was negative $3.9 million for the quarter compared to EBITDA of negative $7.1 million in the second quarter of 2024 and negative $6.7 million in the third quarter of 2023. Net loss was $3.8 million for the quarter versus net loss of $9.7 million in the previous quarter and negative $8.0 million for the year-earlier quarter. …Shipments of Conifex-produced lumber totaled 29.3 million board feet in the third quarter of 2024, representing a decrease of 24% from the 38.5 million board feet shipped in the previous quarter. …Looking ahead to the final quarter of 2024, our average mill net selling price through the first six weeks of the quarter was 17.5% higher.
ONTARIO — Housing starts over the next few years will likely weaken and the already-dire supply shortage could get even worse, the Residential Construction Council of Ontario (RESCON) is warning. A 
WASHINGTON, DC – The Fannie Mae Home Purchase Sentiment Index® (HPSI) increased 0.4 points in November to 75.0, continuing its sharp upward trend over the past year as consumers appear to be acclimating to the higher mortgage rate and home price environment. This month, a new record-high share of consumers indicated that they expect mortgage rates to decline over the next 12 months, while fewer respondents said they expect home prices to rise. While only 23% believe it’s a “good time to buy a home,” on net that component continued its upward trend, and is now notably higher than last November’s share of 14%. The share of respondents saying it’s a “good time to sell” remained flat month over month but is also up from last year. Year over year, the HPSI is up 10.7 points.
The U.S. exported 839,226.4 metric tons of wood pellets in October, down from 898,128.2 metric tons the previous month, but up from 835,490.8 metric tons in October 2023, according to the USDA Foreign Agricultural Service. The U.S. exported wood pellets to approximately a dozen countries in October. The U.K. was the top destination for U.S. wood pellet exports at 700,824 metric tons, followed by Denmark at 92,850.8 metric tons. The value of U.S. wood pellet exports fell to $154.72 million in October, down from $167.05 million in September and $155.41 million in October of last year. Total wood pellet exports for the first 10 months of 2024 reached 8.25 million metric tons at a value of $1.53 billion.
The uptick in fuel prices will likely be temporary, said Ken Simonson, chief economist at the Associated General Contractors of America. However, the broader uncertainty tied to potential trade policy changes under the incoming Trump administration presents a new layer of unpredictability for contractors. …Future prices for crude oil and copper, typically reliable predictors of upcoming producer price index shifts, have recently declined. That indicates the potential for a near-term dip in energy input costs, he said. Contractors have largely benefited from input price stabilization in 2024. As of October, contractors expect their profit margins to expand through the first quarter of 2025. …“The next administration’s trade policy increases uncertainty regarding construction material costs,” said Basu. “Beyond the implications of potential tariffs, input prices may rise in the short term if purchasers rush to import materials prior to the implementation of those policies.”
WASHINGTON – US single-family homebuilding tumbled in October as Hurricanes Helene and Milton depressed activity in the South and permits rose slightly, suggesting that a rebound was likely to be muted by higher mortgage rates. Single-family housing starts, which account for the bulk of homebuilding, plunged 6.9% to a seasonally adjusted annual rate of 970,000 units last month, the Commerce Department’s Census Bureau said on Tuesday. Data for September was revised higher to show homebuilding rising to a rate of 1.042 million units from the previously reported pace of 1.027 million units. Single-family starts dropped 10.2% in the South. Permits for future construction of single-family housing gained 0.5% to a rate of 968,000 units. …Mortgage rates initially fell as the Federal Reserve started cutting interest rates in September. They have, however, erased that decline on strong economic data and concerns that Trump’s policies could reignite inflation.
Jennifer Coskren, Fastmarkets’ director of wood products and timber, comments on the state of the US housing market and a look ahead to 2025. …Construction will ease about 5.5% this year, with the single-family component of our forecast still up 5% to just under one million units. While the September rate cuts by the Federal Reserve may not immediately boost new home construction, future cuts are likely to encourage side lined buyers to enter the market. We are expecting an improvement in construction in 2025. We anticipate a rebound in both single-family and multi-family starts, with a forecast of approximately 1.5 million units, of which 1.1 million of them are single-family. Both single-family and multi-family are forecast to be up around 11%.
The Lane County Board of Commissioners voted Tuesday to approve a property tax exemption for Weyerhaeuser’s planned improvements to its Cottage Grove sawmill, a move officials say will help secure high-paying jobs in the region while ensuring the timber company remains competitive. Weyerhauser, a Seattle-based timber company, applied for the exemption to delay paying taxes on a planned $120 million upgrade to the sawmill, which it says currently employs 225 people. Under the agreement, Weyerhaeuser will save $7.2 million in property taxes over five years, but the company must make a 10% “community benefit payment,” which will be shared by the South Lane School District and the Cottage Grove Community Medical Center Foundation. Additionally, state law mandates Weyerhaeuser pay supplemental fees to the school district in the fourth and fifth years of the exemption.
Policymakers are looking out for indications of what President-elect Donald Trump plans to do to ease housing costs next year. …Trump has spoken frequently of his proposed 60% tariff on goods from China, which he has said would create more manufacturing jobs in the US. …But housing economists and other experts say that could be bad news for building more affordable housing. Selma Hepp, chief economist for CoreLogic, a financial services company, said tariffs are one of her main concerns about the effects of a second Trump term. “One of the biggest concerns is not just lumber [costs], but the overall cost of materials, which have been going up,” Hepp said. Kurt Paulsen, professor of urban planning in the department of planning and landscape architecture at the University of Wisconsin at Madison, said building costs are already high from tariffs on Canadian lumber.
Exports of Southern Pine lumber (treated and untreated) are running 17% ahead of 2023 through the first three quarters of 2024, according to September data from the USDA’s Foreign Agriculture Services’ Global Agricultural Trade System. Southern Pine lumber exports were down 10% in the third quarter of 2024 over the prior quarter but up 11% over the same period in 2023. Exports were up 3% over August and up 20.9% over September 2023. …When looking at the report by dollar value, Southern Pine exports between January and September 2024 are running 9% ahead of the same period in 2023 at $168.7 million, with Mexico leading the way at $46.6 million, followed by the Dominican Republic at $41.3 million, and India at $13.1 million. Treated lumber exports, meanwhile, are flat over the year at $103.1 million led by Jamaica with $17.6 million, the Leeward-Windward Islands at $16.1 million, and the Dominican Republic at $8.4 million.
.jpg?sfvrsn=53e87d1e_3)
Exports from Finland’s forest industry reached Euro 3.16 billion in the third quarter of 2024, marking a 15% increase compared to the same period in 2023, according to the Natural Resources Institute Finland (Luke). Key contributors to the export value included paper (22%), cardboard (29%), pulp (21%), lumber (16%), and plywood (4%). …For the third quarter, total wood imports reached 1.37 million m3, 74% higher than in the corresponding period last year but down 1% from the second quarter of 2024. Of these imports, 68% were pulpwood, 21% were chips, and less than 2% were sawlogs. The wood product industry contributed Euro 0.76 billion in Q3 exports, reflecting an 18% year-on-year increase but a 16% decrease from Q2 2024. Lumber exports rose by 30% in value and 14% in volume compared to Q3 2023, while plywood exports increased by 9% in value and 19% in volume.
The U.K. is expected to import a record 9.641 million metric tons of wood pellets in 2024, according to a report filed with the USDA Foreign Agricultural Service’s Global Agricultural Information Network in November. The expected record in wood pellet imports for 2024 follows a significant decrease in U.K. wood pellet imports in 2023 and 2023, which the report attributes to changes in global wood pellet prices and competition from other energy sources. The U.K. primarily uses wood pellets for industrial energy production, with more than 93% of the country’s wood pellet demand in 2024 expected to be used for that purpose. …The U.S. is the largest supplier of wood pellets to the U.K., accounting for 73% of imports in 2023 by volume. Other sources of U.K. pellet imports are Canada, Latvia, the Netherlands, Estonia and Brazil.
