LEONARD LUMBER REPORT: The September futures made a new high last week and held it

The Lumber Market:

The September futures made a new high last week and held it. It’s not the contract high, but a trend high. We are seeing a higher drift in both cash and futures as the deadlines near. The commitment of trader’s report has a big drawdown in the industry holding of both longs and shorts. We also saw a big jump in the funds long number. Industry trading doesn’t have a big effect on prices. The funds do. We will see if they continue to add or stay neutral.

I’m looking for a reactionary spike once the higher levels are announced the producers raise their prices. From there we have to determine the starting line and measure from it. For a year now, or since Wallstreet confirmed a Trump win, the market has been in an up channel. I will attach a chart of that below. Pure economics indicates possible offsets .

1. July 15^th 2024 to July 15^th , 2025, the futures market is up $260.

2. A 1% increase in the US market share for Euro wood could add 20%.

3. A increase in the PNW production which is sitting at low historic levels.

4. A increase in SYP production winning over a few more spruce traders.

All this will take time. That is why we expect an early spike. From there it will come down to demand.

I struggle with the fact that the industry is bailing out of hedges both longs and shorts when directional risk is growing.

Technical: