July lumber futures plunge to three-week low of US$281/mbf on Thursday after NAR's pending home sales index for April shows 5.5% decline; September reaches six-week low

Wendy Lisney

LOS ANGELES , June 1, 2012 (Industry Intelligence) – The July lumber futures contract hit a three-week low on Thursday, and September reached its lowest level for six weeks, after steep declines on Wednesday, Dow Jones reported on May 31.

The July contract dropped US$8.80 to $283 per thousand board ft. (mbf) on Wednesday on concerns about the European economy and stock-price declines. Traders also reacted to pending home sales data from the National Association of Realtors, which fell in April by the most in a year. The NAR's index of pending home resales dropped 5.5% after gaining 3.8% in March, indicating unreliability in the U.S. housing market recovery.

July closed down $8.80 at $283/mbf and September dropped $4.70 to $286/mbf. Futures for delivery in November closed at $280/mbf, down $7 from Tuesday. Cash prices were quoted in a $308-313 range.

On Thursday, analysts said the market had entered "the slow cycle" after activity in cash markets eased back. They also noted that traders could be waiting to see if supplies and prices would be affected in June by the lowering of export duties on Canadian lumber.

July closed US$2 lower at $281/mbf and September dropped $7 to settle at $279/mbf. Cash prices remained in a $308-$313 range.

The primary sources of this article are Dow Jones, Chicago, on May 30 and 31, 2012.

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