October 2019 International Trade (Softwood Lumber)

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Softwood lumber exports increased (7 MMBF or +6.4%) in October; imports fell (16 MMBF or -1.2%). Exports were 42 MMBF (-27.5%) below year-earlier levels; imports were 61 MMBF (-4.7%) lower. As a result, the year-over-year (YoY) net export deficit was 20 MMBF (-1.7%) smaller. Also, the average net export deficit for the 12 months ending October 2019 was 4.0% 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 (48.8%; of which Canada: 26.1%; Mexico: 22.7%) and Asia (26.4%; especially China: 6.2%; and Japan: 7.0%) were the primary destinations for U.S. softwood lumber exports; the Caribbean ranked third with a 17.8% share. Year-to-date (YTD) exports to China were -62.1% relative to the same months in 2018. Meanwhile, Canada was the source of most (89.0%) of softwood lumber imports into the United States. Imports from Canada were 4.6% lower YTD than the same months in 2018. Overall, YTD exports were down 23.3% compared to 2018; imports: -4.7%. 

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U.S. softwood lumber export activity through the West Coast customs region represented the largest proportion (36.4% of the U.S. total), followed by the Eastern (26.7%) and Gulf (25.8%) regions. Seattle (21.1% of the U.S. total) maintained the lead over Mobile (15.4%) as the single most-active district. At the same time, Great Lakes customs region handled 62.2% of softwood lumber imports -- most notably the Duluth, MN district (23.6%) -- coming into the United States. 

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Southern yellow pine comprised 25.9% of all softwood lumber exports, Douglas-fir (17.4%) and treated lumber (11.5%) were also significant. Southern pine exports were down 37.8% YTD relative to 2018, while treated: -25.4%; Doug-fir: -5.2%.

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.