RIP, Lumber-Futures Contract That Jumped During Covid-19

By Ryan Dezember
The Wall Street Journal
May 14, 2023
Category: Finance & Economics
Region: Canada, United States

The lumber-futures contract that soared during the pandemic and heralded the Covid building boom, broken supply chains and inflation will trade in its final session on Monday. The longtime barometer of wood prices and building activity is being retired and replaced with a new lumber-futures contract in an effort to boost trading. …To draw a larger pool of traders, the new futures contract represents a truckload of two-by-fours delivered to Chicago, instead of a train-car full sent to the British Columbia interior. The new futures also allow for eastern species. …The changes are meant to make trading in two-by-four derivatives a more useful tool for sawmills, builders and lumber yards to manage the risks involved in trading actual wood. At 27,500 board feet, instead of 110,000, each contract represents roughly the amount of lumber needed to build a house. Chicago is much closer to booming housing markets than Canada’s inland rainforest and as a delivery point much better approximates freight costs. [to access the full story a WSJ subscription is required]

Read More