Timber prices have plummeted from the peak of the epidemic. According to Joshua Mahony, senior market analyst at Ig trading platform, timber prices will rise by 65% by the end of 2021.

As of Friday (July 30), timber futures prices hovered around $603 per thousand board feet, 64% lower than the record high of $1711 set in May. A year ago, the commodity traded at about $448 per thousand board feet.

Timber prices, which have been falling for nearly, finally slowed down the downward trend last week. However, the market trend will not change immediately. Market dealers actually control the initiative of the current market, and sawmills facing the off-season of summer sales can also accept the current market price for the sake of maintaining market shipments.

However, according to Mahony, with the passage of the $1.2 trillion bipartisan infrastructure agreement in Congress, the continuous rise of house prices caused by near zero interest rates, and the seasonal historical trend, wood prices are likely to rise again to $1000 per thousand board feet.
Most of the infrastructure plan will be used to build roads and bridges, which will undoubtedly stimulate the demand for building materials, including wood. Most importantly, many Americans continue to build new houses or renovate existing ones. Despite the rise in house prices, low interest rates, consumers' attention to the importance of housing and strong demand in low-density markets such as suburbs and outer suburbs continue to support housing demand.

How long will this price last? For the North American timber market, although the price in the futures market fell by 64%, the price paid by builders in the end market remains high due to the potential huge difference between dealers' inventory holding cost and inventory purchase and sale price. It can not effectively improve the terminal housing price level in the short term.
The senior analyst also pointed out that there are seasonal factors behind his forecast.

Mahony said that the last quarter of the year is usually the "active" period of wood. In the past 12 fourth quarters, wood prices rose in nine quarters, while the decline in the other three quarters was very small, less than 5%.

"There are good reasons to believe that the decline in recent months may soon bring another major buying opportunity, allowing bulls to regain the dominant position." He said.

Mahony believes that the fact that the increase in the first half of this year was erased is "not unusual".

Mahony said, "historically, this reversal will lead to a bullish reversal, recover lost ground and turn the situation into a positive one by the end of the year. The current correction is actually part of a seasonal trend, usually with a dramatic recovery towards the end of the year. "