Market Barometer for November 3, 2021 – U.S. equities climbed higher to set another record …

Commodities, Futures, Stock Market, Widman

U.S. equities climbed higher to set another record after the Federal Reserve signaled monetary policy will remain accommodative while it reduces its massive bond-buying program this month. In New York, the Dow Jones added 104.95 points to 36,157.58, the S&P 500 gained 29.92 points at 4,660.57, while the Nasdaq composite rose 161.98 points to 15,811.58. Canada’s main stock index closed higher today with strong performances from the health care, real estate, consumer discretionary and financial sectors. In Toronto, the S&P/TSX Composite Index ended 95.09 points higher at 21,265.10.
The province of British Columbia has announced its intention to defer timber sales that equate to an unprecedented 2.6 million hectares (6.4 million acres) of B.C.’s most at-risk old-growth forests region. The Province is requesting that First Nations indicate within the next 30 days whether or not they support the temporary deferrals as some of the regions fall under their rights or titles. The BC Council of Forest Industries (COFI) said the decision will have devastating impacts, leading to the closure of up to 20 sawmills and threatening as many as 18,000 jobs.
At the close of trading today, iShares S&P Global Timber & Forestry Index ETF (WOOD) finished with near-average trading volume up firmly by $2.35 (or 2.80%) at $86.40. Over the past week, the ETF has been trading in a sloppy pattern hitting a 3-month low of $83.96 yesterday before today’s correction. In after hour trading.
The Invesco MSCI Global Timber ETF (CUT) closed at the end of trading today with below-average trading volume up $0.75 (or 2.09%) at $36.79. CUT remains range-bound in the lower to mid-$36 price level and has not traded outside of $36 since dropping below $37 on September 27.
CME lumber futures have undergone a roller coaster-like action over the past few days. Converging past cash last week, futures, moved into a temporary discount-to cash position yesterday at around $565 per Mbf, before correcting rapidly back to a premium-to cash position today as persistence resilience in cash markets and news of potential major supply constraints in Canada arrived. Over the past 7-days, there were 3 EFPs, no EFR or block trades recorded.
CME lumber futures final settlements at 3:00 EDT have the soon-to-expire limitless November contract up $29.80 per Mbf at $609.30. The back month contract January closed $30.00 per Mbf higher at $646.70.
Cash market trading was far weaker in the stud business side, but dimension generally held up with ongoing shortages in the narrows and well-established order files providing support. SPF was wobbly, but sales on both sides of mill listed prices were seen. WSPF #2&btr 2x4s are quoted in a range of $590 to $600 per Mbf. Lumber prices last year were slowing their free fall approaching a late quarter bottom around $520 – $540 mill per Mbf.
Sloppy market conditions are expected as buyers pull back to digest recent orders. As is more typically seen in November buyer participation will be largely centered around JIT processing and items offered with shorter shipment times. The sluggish pace may prove to be short-lived given the amount of demand deferral to 2022 and the inordinate supply challenges that are developing. Savvy buyers may see these next three weeks as the perfect time to pre-load for what will likely be another year of four-digit priced lumber.

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