WASHINGTON — Thirty-year-high mortgage rates and a double-digit decrease in U.S. housing starts from a year ago has only curbed Class I railroads’ lumber business by about 3,300 carloads, down just 1%, compared to July 2023. Now proposed Federal interest rate cuts could rejuvenate residential housing starts and give railroads’ lumber business a jolt. U.S. Class I railroads, including the U.S. rail traffic of Canadian National and Canadian Pacific Kansas City, have moved more than 244,000 carloads of lumber so far this year, managing to keep the business mostly flat in the past year despite soaring mortgage rates that peaked at 7.7% for a 30-year fixed mortgage in October 2023. …With inflation cooling and the Fed expected to decrease interest rates at least once in 2024. …But falling interest rates isn’t a sure bet that railroads will start hauling more center-beams. Trucking is the perpetual thorn in the side for railroads.
Fresh home sales data has finally answered the question for real estate watchers: The Bank of Canada’s initial interest rate cut in June did not open the floodgates to buyers, many of whom remain sidelined through an unseasonably slow spring housing market. Sales figures from local real estate boards released in the past week show last month’s home sales did not see much of an uptick after the Bank of Canada’s quarter-point cut on June 6, the first decrease in four years and a substantial shift in monetary policy after the central bank’s fastest tightening cycle on record. …The reaction to lower borrowing costs appears to be showing up first among existing owners who have started to list their properties, Soper says, as evidenced by rising inventories in markets across Canada.
In a 
In early 2023, Canfor closed the original mill as it was too old and oversized for the available timber supply, later announcing they would move forward in with building a new, smaller mill. In May 2024, they then announced, “we have made the difficult decision to suspend our plan to build a new state-of-the-art sawmill in Houston, as we are not confident that an investment of this magnitude can be successful at this time.” …This announcement may look somewhat like many sawmill closures from a lack of fibre in BC, but this one is much more serious. It is a message to government that BC is “uninvestable” as some analysts have stated due to policy changes that create business uncertainty. …In terms of BC marketing, permanent mill closures and withdrawn investments are some of the worst news a lumber exporting region can deliver to world markets. …What a shame it has gone this way, and so quickly.
The twin-peaked lumber bubble of 2021 and 2022 is now nothing more than a memory. Spot lumber prices have plummeted 75% from their May 2021 record high to just $366 this week. …While the demand side of the lumber market is ailing, the supply side may be in an even worse position. …“It’s a classic bullwhip,” Jalbert noted. “The supply side [responds] in a like manner to demand, and by the time it comes to the market that demand picture is already changed—and in this case in a negative way.” …Jalbert also believes lumber prices will likely stagnate through year-end 2024, but in 2025, he argues things could turn around. Some sawmills will be forced to slow or shut down production due to depressed lumber prices in the second half of this year, lowering lumber supply—“the bullwhip in the opposite direction.”… “But that’s going to take time.”
Canada’s annual inflation rate reaccelerated unexpectedly to 2.9% in May while measures of core inflation also increased, according to Statistics Canada, reducing the odds of a Bank of Canada rate cut in July. Analysts had expected inflation to cool to 2.6% from 2.7% in April. Statistics Canada said that acceleration was largely due to higher prices for services, which increased 4.6% in May. …The Bank of Canada’s closely watched measures of core inflation also edged up in May, surprising economists. …”Overall, with the data showing much faster price pressures than expected, this casts a lot of doubt on the possibility of a July cut.” The slowing of Canada’s annual inflation rate in April was one of the factors that prompted the Bank of Canada to cut its benchmark interest rate for the first time in four years earlier this month.
VANCOUVER — West Fraser Timber has declared a quarterly dividend of US$0.32 per share on the Common shares and Class B Common shares in the capital of the Company, payable on July 12, 2024 to shareholders of record on June 26, 2024. The quarterly dividend has been increased from the prior US$0.30 per share in light of the share count reduction resulting from execution of recent normal course issuer bids. “We are pleased to increase our dividend this quarter,” said Sean McLaren, West Fraser’s President and CEO. “A sustainable quarterly dividend is a key priority within our capital allocation strategy.”
The U.S. exported 926,024.1 metric tons of wood pellets in May, up from 819,341.5 metric tons exported the previous month and 820,057.5 metric tons exported in May 2023, according to data released by the USDA Foreign Agricultural Service on July 3. The U.S. exported wood pellets to more than a dozen countries in May. The U.K. was the top destination for U.S. wood pellet exports at 654,234.4 metric tons, followed by Japan at 154,311.4 metric tons and the Netherlands at 91,973.5 metric tons. The value of U.S. wood pellet exports reached $167.35 million in May, up from $157.26 million in April and $153.12 million in May of last year. Total U.S. wood pellet exports for the first five months of 2024 reached 4.12 million metric tons at a value of $774.64 million, compared to 3.75 million metric tons exported during the same period of 2023 at a value of $690.01 million.
High interest rates continued to batter the housing market in May as both 
Data released on Friday shows that 
Housing prices in America today are near an all-time high, and home ownership has yet to recover from the 2008 and 2020 recessions. …With construction materials making up roughly 60% of a home’s cost, we need to address the problem from another angle. The U.S. currently has tariffs on important construction materials such as Canadian lumber and Chinese nails and pipes. Eliminating such building material tariffs could deliver a powerful blow to the other side of this housing problem. Unfortunately, President Biden has other plans. This May, the president announced a new 25% duty rate on Chinese steel, up from 0-7.5%. For comparison, the 5-20% duty rates on Canadian softwood lumber added an extra $24,000 to construction costs in 2021. Construction costs have skyrocketed since 2020, increasing by an average of 20% and outpacing even the highest inflation rate of 8%. Imposing still more tariffs on important construction materials will only further inflate those costs.
A report released by the Commerce Department on Thursday unexpectedly showed a steep drop in new residential construction in the U.S. in the month of May. The Commerce Department said housing starts plunged by 5.5% to an annual rate of 1.277 million in May after surging by 4.1% to a revised rate of 1.352 million in April. Economists had expected housing starts to climb by 0.7%. With the unexpected decrease, housing starts fell to their lowest level since hitting an annual rate of 1.254 million in June 2020. Single-family housing starts dove by 5.2% to an annual rate of 982,000, while multi-family housing starts plummeted by 6.7% to an annual rate of 295,000. …The report also said building permits slumped by 3.8% to an annual rate of 1.386 million in May after tumbling by 3.0% to a rate of 1.440 million in April.
To the extent areas of increased climate risk may be reflected in pockets of repriced real estate in the US, those pockets have the potential to infect other areas of our financial system. After all, it was foreclosures in Las Vegas, Phoenix, and a handful of other locations that led to a cascade of global effects in 2008. …If we wanted to steadily, prudently reduce risks to homeowners in America that are being caused by out-of-date building codes, inadequate land-use policies, and under-capitalized insurers, one possible area to examine would be the rules that Fannie Mae and Freddie Mac use to screen the mortgages they agree to guarantee. Using this power wisely has the potential to affect much of the housing market, because these Government Sponsored Enterprises support about 70 percent of the mortgage market, according to the National Association of Realtors.
HELSINKI — European softwood production declined by 6.4% in 2023 to 80,894,000m3 with a further slight drop expected in 2024, according to the European Organisation of the Sawmilling Industry (EOS). The figures were presented at the EOS summer General Assembly in Helsinki on June 12-13. The forecast for 2024 is 79,459.000m3, which if accurate will be the lowest production output for EOS countries for about nine years. But the EOS says there is hope in the industry that the market will bottom out this year. Production shrunk by 5-10% across EOS member countries in 2023, with the decline in turnover much more sizable. Overseas the situation was equally difficult with subdued exports across the board with the exception of the US. Increasing sawnwood deliveries to the US have helped some European sawmills navigate this challenging environment. “Many countries have emphasized a disconnect between subdued sawnwood prices and high raw material prices,” said the EOS.