July 2017 International Trade (Softwood Lumber)

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Softwood lumber exports decreased (19 MMBF or +12.3%) in July, while imports slipped (3 MMBF or -0.3%). Exports were 6 MMBF (+4.3%) above year-earlier levels; imports were 214 MMBF (-15.4%) lower. As a result, the year-over-year (YoY) net export deficit was 219 MMBF (-17.4%) lower. Moreover, the average net export deficit for the 12 months ending July 2017 was 6.3% smaller 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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Asia (especially China: 22.3%) and North America (of which Canada: 17.4%; Mexico: 19.7%) were the primary destinations for U.S. softwood lumber exports in July. Year-to-date (YTD) exports to China were +12.3% relative to the same months in 2016. Meanwhile, Canada was the source of most (91%) of softwood lumber imports into the United States. Interestingly, imports from Canada are 15.1% lower YTD than the same months in 2016. Overall, YTD exports were up 2.0% compared to 2016, while imports were down 12.3%. 

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U.S. softwood lumber export activity through Eastern customs region represented the largest proportion in July (36.1% of the U.S. total), followed by the West Coast (31.0%) and the Gulf (26.4%) regions. However, Seattle maintained a small lead (19.0% of the U.S. total) over Mobile (15.8%) as the single most-active district. At the same time, Great Lakes customs region handled 64.2% of softwood lumber imports -- most notably the Duluth, MN district (27.9%) -- coming into the United States. 

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Southern yellow pine comprised 36.0% of all softwood lumber exports in July, followed by Douglas-fir (13.6%) and treated lumber (13.1%). Southern pine exports were up 5.9% YTD relative to 2016, while treated: +31.6%; Doug-fir: +5.6%.

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.