July 2018 International Trade (Softwood Lumber)

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Softwood lumber exports extended their decline (6 MMBF or -4.2%) in July, along with by imports (-33 MMBF or -2.3%). Exports were 5 MMBF (-3.5%) below year-earlier levels; imports were 186 MMBF (+15.8%) higher. As a result, the year-over-year (YoY) net export deficit was 191 MMBF (18.3%) larger. However, the average net export deficit for the 12 months ending July 2018 was 4.4% 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: 23.0%; Mexico: 17.6%) and Asia (especially China: 15.2%) were the primary destinations for U.S. softwood lumber exports in June; the Caribbean ranked third with a 20.5% share. Year-to-date (YTD) exports to China were +22.6% relative to the same months in 2017. Meanwhile, Canada was the source of most (88.4%) of softwood lumber imports into the United States. Imports from Canada are 3.7% lower YTD than the same months in 2017. Overall, YTD exports were up 10.8% compared to 2017, while imports were down 2.5%.  

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U.S. softwood lumber export activity through the West Coast customs region represented the largest proportion in July (33.0% of the U.S. total), followed closely by the Eastern region (31.2%) and the Gulf (25.4%) regions. Moreover, Seattle maintained its lead (19.6% of the U.S. total) over Mobile (16.6%) and Savannah (13.0%) as the single most-active district. At the same time, Great Lakes customs region handled 59.8% of softwood lumber imports -- most notably the Duluth, MN district (23.2%) -- coming into the United States. 

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Southern yellow pine comprised 29.9% of all softwood lumber exports in July, Douglas-fir (13.3%) and treated lumber (9.5%). Southern pine exports were up 16.1% YTD relative to 2017, while treated: -3.6%; Doug-fir: -5.1%.

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.