The US timber and lumber market is experiencing stabilization, with prices expected to remain in the range of $300 to $400 per thousand board feet for the next three to six months. This relatively flat trajectory is attributed to several factors, including the ongoing economic downturn, subdued housing starts, regular market cycles influenced by seasonal weather patterns, and the possibility of stricter lending practices. Scott Reaves, Chief Operations Officer and Director of Forest Operations, predicts that these conditions will contribute to the stability of timber and lumber prices. Domain Timber Advisors emphasizes the importance of diversification in timberland investing and explores alternative value-added approaches to asset management, such as land sale opportunities and partnerships in carbon, solar, and wind power. The demand for timber is primarily driven by domestic usage, particularly in the housing market, while lumber production in the US has decreased by approximately 5% compared to last year. Global economic conditions indirectly influence North American timber markets and have led to increased capital seeking timberland investments and scrutiny of sustainability claims. Investors are increasingly prioritizing verifiable sustainability, carbon, and other ESG-centric claims. Market trends to monitor include biodiversity conservation, carbon storage and sequestration, and alternative methods like underground carbon storage. [56f23ec1]
The US economy is expected to undergo structural changes in the labor market, residential real estate, and inflation as it progresses into the New Year. Investors are advised to focus on leading indicators, such as the ratio of part-time workers, rather than lagging metrics like headline growth stats. The Federal Reserve is anticipated to shift from a tightening bias to a more wait-and-see approach as inflation pressures ease. The real estate market may be affected by hybrid work and high borrowing costs, resulting in a slower market with minimal normalization of home prices. Workers are currently in a strong position, with pay transparency laws and high demand. The article recommends a neutral tactical allocation to equities and an up-in-quality approach with benchmark-level interest rate sensitivity in fixed income. [dc8616e2]
The labor market in the US is still considered strong compared to a typical recession, despite recent layoffs in the tech sector. Economists suggest that the data does not warrant alarm, as the layoffs are limited to a small portion of the job market and typically affect highly educated individuals who can easily find new jobs. However, there is a risk of increased layoffs and decreased hiring if monetary policy remains restrictive. The Federal Reserve projects a slight increase in the unemployment rate next year but expects it to remain relatively stable through 2026. Indicators such as consumer spending in the services sector provide some momentum, but economists anticipate a gradual deterioration in employment in 2024 as interest rates remain high. The labor market is considered a lagging indicator, and there is still uncertainty about the impact of the tightening monetary environment. [5c826b9c]
Analysts from John Burns Research and Consulting shared their observations on the state of the building supply industry during a recent presentation hosted by the National Lumber and Building Material Dealers Association. According to the researchers' survey of dealers, demand appears to be normalizing across most customer types. The analysts believe that the U.S. economy is likely to avoid a recession and expect a soft landing. Inflation is a major concern, as it could lead to a higher-for-longer interest-rate environment and potential cracks in the economy. Dealer orders are up, with 60% of dealers reporting accelerating orders in April, the highest reading in two years. The 30-year fixed-rate mortgage is anticipated to end 2024 with an average of 6.6%. Supply chain issues have improved, but geopolitical events in the Red Sea region could cause disruptions. The survey also indicates that smaller and denser homes are on the horizon due to affordability concerns. The presentation was part of the National Lumber and Building Material Dealers Association's webinar series. [f156d03c]
Mexico is America’s largest timber buyer, importing over 132,500 cubic meters of lumber from the US in June 2024, up 13.5% from 2023. Mexican traders imported over 726,000 cubic meters of lumber from the US in the first six months of 2024, accounting for 25% of its total export market. The US, Mexico, and Canada, as part of USMCA, are working together to combat illegal logging and deforestation. The US and Canada are among the top 5 countries in the world for timber production. Mexico's economy has sustained an annual growth of 3-4% due to supply-side public policies. [e1930a9c]
Wood Central is an Australian platform covering wood-based media across all digital platforms. [e1930a9c]