Snow, ice and cold sent contractors on eastern U.S. job sites running for cover the end of last week. That is not the case country wide, however it is a possibility in 80% of the continental U.S. now through the end of February.
One can only ponder, in the depths of winter, how could our lumber market possibly rally? It's all about inventory comfort level in relation to the next six weeks, not the next six days. After a month of inventory liquidation, contractor yards are uncomfortably lean. Replenishment momentum will build in February.
The mid-winter lumber rally is not a new bull market, rather the last up leg of the winter bull market. It may not make a new high, nevertheless it should be expected to relieve the downward momentum. The mid winter lumber rally is worth investing in.
Producer Order Files
Mills are out of orders. Some are negotiating price for sales, others are trying to wait out the buyers. Winter weather is certainly slowing job sites, however a month of dealer inventory liquidation has created holes to fill.
Forecast
The lumber market is under pressure, at the same time some buyers are getting concerned about being under stocked. Prices should weaken this week and next. Three weeks from now, regardless of weather, buyers will be feeling the urgency of covering over- exposed areas.
Strategy
Get your house in order. Begin to scale-in buy this week and wrap it up the week after, covering needs through mid April to avoid restocking at the top. Mills will likely be counterable early in the week. Counter $10 and buy it.
Looking forward, ml