A mini-trade war between the U.S. and Canada is set to send lumber prices higher.
At issue is the price Canadian foresters charge to cut down a tree, which is known as stumpage. The Canadians charge less than their U.S. counterparts, explains Kevin Mason, managing director at ERA Forest Products Research in Vancouver. U.S. producers believe the price is unfairly low and is undercutting U.S. lumber activity.
The immediate result of any new tariffs or trade restrictions would be reduced supply of wood to the U.S., where demand for housing lumber is likely to rise sharply. The effects have already spread from the outdoors to Chicago’s trading floors. Active-month contracts closed Friday around $377 per 1,000 board feet, up from around $338 at year end. But there’s potential for further gains as a tariff-free solution looks unlikely before a preliminary ruling set for April 24. Read morehere.