June 2016 International Trade (Softwood Lumber)

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Softwood lumber exports increased (+13 MMBF or 9.7%) in June while imports fell (-177 MMBF or 11.2%). Exports were 9 MMBF (6.5%) above year-earlier levels; imports were 235 MMBF (19.7%) higher. As a result, the year-over-year (YoY) net export deficit was 226 MMBF (21.3%) larger. The average net export deficit for the 12 months ending June 2016 was 29.7% 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 June (41.1%, of which Canada: 21.3%; Mexico: 19.9%). Asia (especially China: 15.5%) ranked second, with 30.7%. Year-to-date (YTD) exports to China were up 11.5% relative to the same months in 2015. Meanwhile, Canada was the source of nearly all (96.1%) softwood lumber imports into the United States. After a brief burst in May that rocketed it to the #2 spot YTD (from #26 in 2015, France has subsequently fallen to the #3 spot. Overall, YTD exports were down 0.1% compared to 2015, while imports were up 38.0%. 

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U.S. softwood lumber export activity through West Coast customs districts represented the largest proportion in June (35.0% of the U.S. total), although the Eastern and Gulf districts were not far behind (33.1% and 25.2%, respectively); Seattle maintained its dominance as the most active export district (22.6% of the U.S. total). At the same time, Great Lakes customs districts handled 67.0% of the softwood lumber imports -- most notably Duluth, MN (28.1%) -- coming into the United States. 

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Southern yellow pine comprised 33.5% of all softwood lumber exports in June, followed by Douglas-fir with 12.5%. Southern pine exports were up 11.6% YTD relative to 2015, while Doug-fir exports were down 15.7%.

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.