March 18th, 2022
By Xinyao Wang, Insights Team
Softwood lumber prices started rising again in North America in March and are expected to peak within the next two months. Supply is still disrupted, causing prices to reach levels last seen in spring 2021. The lumber price reached $1,308 per thousand board feet according to Nasdaq data. Production in North America increased in 2021 and an incremental increase is expected later this year. However, short-term supply disruptions, coupled with higher-than-average demand, have been driving prices up.

Supply disruptions in British Columbia are having the greatest impact on rising lumber prices. The situation was further complicated in February when Canadian truckers took to Ottawa to protest the Canadian government’s harsh COVID mandates. The Russia-Ukraine conflict does not have a direct effect on lumber prices since the US imports from Russia are limited. However, if Canada and the United States should make up for any of Russia’s exports to mainland China or other large importers, North America would register higher prices as well.

The US Commerce Department made its decision last November to double its tariffs on Canadian softwood lumber imports to nearly 18%, despite the inability of domestic sawmills to meet US demand. Jerry Konter, Chairman of the National Association of Home Builders (NAHB), has been urging the Biden administration to increase domestic production of timber from federal lands and to work with Canada on a new softwood lumber agreement that will eliminate tariffs.

Source: Federal Reserve Bank of St. Louis, Monthly, Not Seasonally Adjusted