Market Update for November 10, 2021 – U.S. stocks fell by the most in a month …

Commodities, Futures, Stock Market, Widman

U.S. stocks fell by the most in a month as an unexpected higher inflation reading raised fears within the financial markets. In New York, the Dow Jones dropped 240.04 points to 36,079.94, the S&P 500 lost 38.54 points at 4,646.71, while the Nasdaq fell 263.84 to 15,622.70. Canadian equities were also weaker at the close, as losses in the Healthcare, Clean Technology and IT sectors pushed shares into the negative. In Toronto, the S&P/TSX Composite Index ended 132.59 points lower at 21,461.93.
At the close of trading today, iShares S&P Global Timber & Forestry Index ETF (WOOD) finished on higher-than-average trading volume down $1.15 (or 1.34%) at $84.99. Today marks the third consecutive day that the ETF has closed lower than the previous session. WOOD is under general selling pressure from a weaker tone in both the futures and cash markets.
The Invesco MSCI Global Timber ETF (CUT) closed at the end of trading today on below-average trading volume down $0.25 (or 0.67%) at $36.64. CUT crept slightly higher this month, moving from a sideway trade pattern in the low $36.00 range to the mid to higher $36.00 level.
CME Lumber Futures, which had converged to cash last week, were tracking relatively close to cash trading levels this week. Typical trading activity seen with expiring contracts was also in play with higher EFP transactions, but lower trade volume and open interest numbers. The incoming contract, January was far more active with double the volume and nearly 1,000 more open interest items than November. Over the past 7-days, there were 41 EFP recorded, and no EFR/S, or block trade activity.
CME lumber futures final settlements at 3:00 EDT have the expiring November contract down $1.00 per Mbf at $586.50. The back month contract January closed down $2.30 per Mbf at $637.80.
Cash market trading pace was subdued as mills struggled to secure buyers. The former growing more cautious with not only the time of year but with uncertainly around pricing and broken regional shipping and logistic channels. WSPF #2&btr 2x4s are quoted in a range of $580 to $590 per Mbf. Quotes at this time last year were exactly even with cash today in a range of $580 – $595 per Mbf.
The upcoming U.S. Thanksgiving holiday will signal the beginning of curtailment season as mills take increasing amounts of downtime or shorter shift hours to offset lower sales volumes that are seen from November through December. Multiple supply deterrents are hitting Canadian producers, especially the majors in B.C. Record high retroactively calculated stumpage costs, higher U.S. softwood duties, container/shipping issues for exports, have combined with a sudden massive logging license deferral from the B.C. provincial government. These factors have created the perfect storm and significantly raise concerns that 2022 could easily see supply issues that surpass those of 2020 or 2021.
Veteran’s and Remembrance Day in the U.S. and Canada, respectively, will produce an abbreviated workweek for some traders leading to a slightly slower trading pace through to the end of the week. Mother nature and the arrival of more inclement winter weather will continue to add some headwinds on the demand side, but with the extremely robust unseasonal consumption pace this autumn most producers are welcoming the reprieve to get a hand on production and inventory with 2022 inching closer. A quieter sales tone, along with slightly weaker prices will likely persist for the next week or two before a firm correction begins.

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