May 2018 International Trade (Softwood Lumber)

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Softwood lumber exports extended their decline (5 MMBF or -2.8%) in May, while imports rose (66 MMBF or +4.9%). Exports were 31 MMBF (+23.2%) above year-earlier levels; imports were 146 MMBF (+11.6%) higher. As a result, the year-over-year (YoY) net export deficit was 115 MMBF (10.2%) larger. However, the average net export deficit for the 12 months ending May 2018 was 10.4% 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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North America (of which Canada: 23.3%; Mexico: 15.2%) and Asia (especially China: 16.0%) were the primary destinations for U.S. softwood lumber exports in May; the Caribbean ranked third with a 21.6% share. Year-to-date (YTD) exports to China were +46.0% relative to the same months in 2017. Meanwhile, Canada was the source of most (93.4%) of softwood lumber imports into the United States. Imports from Canada are 9.6% lower YTD than the same months in 2017. Overall, YTD exports were up 1.3% compared to 2017, while imports were down 9.3%. 

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U.S. softwood lumber export activity through the Eastern customs region represented the largest proportion in May (36.0% of the U.S. total), followed by the West Coast (30.0%) and the Gulf (23.8%) regions. However, Seattle maintained its lead (19.5% of the U.S. total) over Mobile (16.1%) and Savannah (15.7%) as the single most-active district. At the same time, Great Lakes customs region handled 66.5% of softwood lumber imports -- most notably the Duluth, MN district (28.5%) -- coming into the United States. 

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Southern yellow pine comprised 30.0% of all softwood lumber exports in May, Douglas-fir (11.6%) and treated lumber (11.7%). Southern pine exports were up 39.4% YTD relative to 2017, while treated: +2.2%; Doug-fir: -3.4%.

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.