My rhetoric has been leaning towards the bearish side because buyers should not even be looking for lumber in October. The strategy of buying in late August to cover through early November was to avoid having to buy right now, the end of September.
The lumber market should have been going up in September and buyers should have been telling suppliers, “No thanks, I bought a month ago and I’m good for another month.” To maximize the usefulness of LLG FORECASTS & BRIEFINGS, users should be in a financial condition and have appropriate space to carry a minimum 8–10 weeks inventory. That is the common link they all possess...similar lumber styles.
There should be no alarms going off when suppliers report good sales and rising prices. We are in the bottom chop. The plan is to avoid anything unpredictable in September and October and right now it’s looking very, very normal...even futures. The futures premiums are high but the direction is dead on, ratcheting higher through September.
The momentum behind this burp was a massive industry shift away from speculative and just-in-time or from whatever their strategy was to “JUST-IN-CASE”...including framers and builders. All sectors have insurance wood.
This current Overlooked Obvious is an item that should be at the top of the shortage list. That is “STORAGE.” Public warehouses, reloads, distribution centers, containers, lumber sheds, yard space...there is virtually no where to put any volumes of lumber and panels due to the “JUST-IN-CASE” buying strategies implemented in September. This market is already grossly over bought. October should serve up some weakness.
Looking Forward...ML
The lumber market really is easy when you know what is coming. For the LLG PHD in lumber trading, buying, and selling, classes resume in November (max 20 attendees). Email me for details (matt@laymansguide.com), call me for a private consultation (336.516.5584), or visit The Minute Clinic at BCMC. www.laymansguide.com.