Although U.S. hardwood grade lumber prices have risen and retreated rapidly during the past two years, our research suggests recent price trends have become highly responsive to movements in two leading indicators:
a) the Yuan-Dollar exchange rate;
b) the U.S. monetary base
Below, readers will note the downward movements in both indicators in early 2022 were followed by a sharp decline in average U.S. hardwood grade lumber prices later in the year. That’s not to say the Yuan-Dollar exchange rate and the U.S. monetary base are the only two influences affecting U.S. hardwood lumber prices. Certainly, end-use customers’ aggregate inventory levels and other supply chain forces play a role. But, the data indicates a strong correlation with those two drivers– at least during the most recent cycle. And, it’s no wonder. China remained the top foreign purchaser of U.S. hardwood lumber in 2022 (33%, by volume). In the coming months, watch for U.S. hardwood lumber prices to trend in the general direction of these two metrics.
As always, we encourage you to contact your friendly FORECON team and see how we might add value to your next forestry project.