October 2015 Macro Pulse -- The Day After?

Those of a certain age may recall the 1983 TV movie The Day After that explored possible effects of nuclear war on the United States. Although hardly on the same level, some of the hyperbole surrounding the proverbial “wall of cheap Canadian wood” -- allegedly poised to flow south after the Softwood Lumber Agreement (SLA) between the United States and Canada expired on October 12 -- suggested a catastrophe-in-the-making for U.S. lumber producers. Interestingly, however, whereas many market watchers expected lumber prices to collapse, that has not happened (so far at least). In fact, lumber futures prices have actually rebounded smartly from late-September lows; as of mid-October, futures prices of several near-term contract dates had recouped roughly half of the ground lost since June. One source attributed the price jump to traders covering short positions after observing U.S. imports of Canadian timber in October “were on pace to be the smallest monthly volumes in at least two years.” The market can turn on a dime, of course, but we conclude from these observations that most “fallout” from the SLA’s expiration may have already occurred.

Click here to read the rest of the October 2015 Macro Pulse recap.

The Macro Pulse blog is a commentary about recent economic developments affecting the forest products industry. The monthly Macro Pulse newsletter summarizes the previous 30 days of commentary available on this website.