May 2016 International Trade (Softwood Lumber)

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Softwood lumber exports increased (+4 MMBF or 2.9%) in May while imports jumped more noticeably (+154 MMBF or 10.6%). Exports were 9 MMBF (6.5%) below year-earlier levels; imports were 515 MMBF (47.1%) higher. As a result, the year-over-year (YoY) net export deficit was 524 MMBF (55.1%) larger. The average net export deficit for the 12 months ending May 2016 was 28.5% higher than the average of the same months a year earlier (the “YoY MA(12) % Chng” series shown in the graph above). 

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North America was the primary destination for U.S. softwood lumber exports in May (44.5%, of which Canada: 22.4%; Mexico: 22.1%). Asia (especially China: 15.6%) placed a close second, with 32.5%. Year-to-date (YTD) exports to China were up 10.6% relative to the same months in 2015. Meanwhile, Canada was the source of nearly all (90.6%) softwood lumber imports into the United States. Interestingly, France has rocketed to the #2 spot YTD, from #26 in 2015. Overall, YTD exports were down 1.5% compared to 2015, while imports were up 42.1%. 

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U.S. softwood lumber export activity through West Coast customs districts represented the largest proportion in May (37.1% of the U.S. total), although the Gulf and Eastern districts were not far behind (27.7% and 27.0%, respectively); Seattle maintained its dominance as the most active export district (22.9% of the U.S. total). At the same time, Great Lakes customs districts handled 66.2% of the softwood lumber imports -- most notably Duluth, MN (25.1%) -- coming into the United States. 

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Southern yellow pine comprised 29.5% of all softwood lumber exports in May, followed by Douglas-fir with 12.6%. Southern pine exports were up 4.5% YTD relative to 2015, while Doug-fir exports were down 14.4%.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.