December 2016 International Trade (Softwood Lumber)

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Softwood lumber exports decreased (13 MMBF or -9.7%) in December, while imports declined (38 MMBF or -2.9%). Exports were 2 MMBF (-1.2%) below year-earlier levels; imports were 77 MMBF (+6.5%) higher. As a result, the year-over-year (YoY) net export deficit was 79 MMBF (+7.4%) larger. The average net export deficit for the 12 months ending December 2016 was 26.1% 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 December (38.3%, of which Mexico: 20.1%; Canada: 18.2%). Asia (especially China: 19.5%) ranked second, with 35.4%. Year-to-date (YTD) exports to China were up 16.8% relative to the same months in 2015. Meanwhile, Canada was the source of nearly all (95.0%) softwood lumber imports into the United States; Imports from Canada are 22.5% higher YTD than the same months in 2015. Overall, YTD exports were down 2.8% compared to 2015, while imports were up 23.4%. 

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U.S. softwood lumber export activity through West Coast customs districts represented the largest proportion in December (35.0% of the U.S. total), the Eastern and Gulf districts lagged (30.1% and 27.6%, respectively); Seattle maintained its dominance as the most active export district (20.3% of the U.S. total). At the same time, Great Lakes customs districts handled 65.4% of softwood lumber imports -- most notably Duluth, MN (28.3%) -- coming into the United States. 

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Southern yellow pine comprised 33.9% of all softwood lumber exports in December, followed by Douglas-fir with 12.8%. Southern pine exports were up 12.9% YTD relative to 2015, while Doug-fir exports were down 20.2%.

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.