July 2016 International Trade (Softwood Lumber)

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Softwood lumber exports decreased (-14 MMBF or 9.4%) in July, along with imports (-37 MMBF or 2.6%). Exports were 2 MMBF (1.6%) above year-earlier levels; imports were 363 MMBF (35.3%) higher. As a result, the year-over-year (YoY) net export deficit was 361 MMBF (40.1%) larger. The average net export deficit for the 12 months ending July 2016 was 33.7% higher 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 was the primary destination for U.S. softwood lumber exports in July (41.8%, of which Canada: 20.2%; Mexico: 21.6%). Asia (especially China: 18.6%) ranked second, with 33.5%. Year-to-date (YTD) exports to China were up 14.2% relative to the same months in 2015. Meanwhile, Canada was the source of nearly all (96.5%) softwood lumber imports into the United States. Overall, YTD exports were up 0.1% compared to 2015, while imports were up 37.6%. 

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U.S. softwood lumber export activity through West Coast customs districts represented the largest proportion in July (35.2% of the U.S. total), although the Eastern and Gulf districts were not far behind (29.0% and 28.1%, respectively); Seattle maintained its dominance as the most active export district (22.4% of the U.S. total). At the same time, Great Lakes customs districts handled 66.8% of the softwood lumber imports -- most notably Duluth, MN (28.3%) -- coming into the United States. 

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Southern yellow pine comprised 32.6% of all softwood lumber exports in July, followed by Douglas-fir with 11.7%. Southern pine exports were up 14.2% YTD relative to 2015, while Doug-fir exports were down 18.0%.

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.