May 2017 International Trade (Softwood Lumber)

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Softwood lumber exports increased (8 MMBF or +6.6%) in May, while imports fell (203 MMBF or -13.9%). Exports were 1 MMBF (+0.5) above year-earlier levels; imports were 351 MMBF (-21.9%) lower. As a result, the year-over-year (YoY) net export deficit was 352 MMBF (+23.9%) larger. Moreover, the average net export deficit for the 12 months ending May 2017 was just 0.8% greater 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 (of which Canada: 21.8%; Mexico: 21.7%) and Asia (especially China: 17.8%) were the primary destinations for U.S. softwood lumber exports in May. Year-to-date (YTD) exports to China were somewhat higher (+6.3%) relative to the same months in 2016. Meanwhile, Canada was the source of most (92.5%) of softwood lumber imports into the United States. Interestingly, imports from Canada are 13.5% lower YTD than the same months in 2016. Overall, YTD exports were up 0.3% compared to 2016, while imports were down 10.8%. 

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U.S. softwood lumber export activity through Eastern customs region represented the largest proportion in May (34.6% of the U.S. total), followed by the West Coast (33.6%) and the Gulf (24.6%) regions. However, Seattle maintained a sizeable lead as the single most-active district (21.8% of the U.S. total). At the same time, Great Lakes customs region handled 64.8% of softwood lumber imports -- most notably the Duluth, MN district (28.9%) -- coming into the United States. 

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Southern yellow pine comprised 26.9% of all softwood lumber exports in May, followed by treated lumber (14.9%) and Douglas-fir (15.7%). Southern pine exports were up 1.1% YTD relative to 2016, while Doug-fir exports were up 0.7%; treated: +38.9%.

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.