China demand helps keep lumber futures high amid lower global inventory; China expected to stockpile wood in 2013, as six years of North American mill closures contribute to price increases

Audrey Dixon

NEW YORK , December 24, 2012 (Bloomberg LP) – Lumber futures jumped to the highest in more than six years on increasing demand in China and the U.S. amid lower global inventory.

China will build stockpiles in 2013 after “substantial” mill closures across North America in the past six years, boosting prices for wood products, according to Scotiabank Group. Lumber will lead commodity gains in 2013, the Toronto- based bank said. Through Dec. 21, the price surged 43 percent in 2012.

“China is going to go through a restocking cycle,” Jamie Greenough, a broker at Global Securities Corp. in Vancouver, British Columbia, said in a telephone interview. “Inventories are quite low in the U.S. If you need lumber, you’re getting forced into the market to cover your requirements.”

On the Chicago Mercantile Exchange, lumber futures for March delivery gained by the limit of $10, or 2.7 percent, to $384.50 per 1,000 board feet at 10:21 a.m., the highest for a most-active contract since Jan. 12, 2006.

Lumber settled $10 higher on Dec. 21. This quarter, the price has surged 38 percent

Wheat futures in Chicago have climbed 21 percent this year, leading 24 raw materials in the Standard & Poor’s GSCI Spot Index. Lumber isn’t included in the benchmark gauge.

--Editors: Patrick McKiernan, Steve Stroth

To contact the reporter on this story: Tony C. Dreibus in Chicago at tdreibus@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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