RCM Ag Services

Category: Lumber

18 Aug 2025
Agriculture, CME, Education, Futures, Housing, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

LEONARD LUMBER REPORT: The feature of the week was the extreme down move between Monday and Wednesday

The Lumber Market:

The feature of the week was the extreme down move between Monday and Wednesday. Sept futures dropped almost $46 in three days. At the same time, the open interest was rapidly decreasing. It was all liquidation. The longs were selling, the algo was selling, and the industry was buying their shorts back. The algo doesn’t accumulate a position, so it was all sides of the trade exiting. The Commitment of Traders report showed a sharp drop in the industry shorts. After nine sessions of selling, futures caught a breather on Thursday and returned to the sedate mode on Friday. At this point, the market needs a macro look now that most of the noise is behind us. The following points are key:

It’s a tough call here. A bit of good news can pop the market, while no news erodes your inventory value. The data is neutral. I would look for a general pickup in demand or at least building going into the fourth quarter, but this outside noise never ends. Selling your cash is the best trade.

Technical:

The September futures have corrected 85% of the move. The majority of the time, if it goes 61% it goes 100%. That puts the 594.50 low as an objective. Now most are out of shorts already, so there won’t be a large volume to buy from here down. That makes least resistance down. The one caveat is that the RSI is only 20%. It needs a better correction.

Note:

Tuesday:

Starts 1.30 down from 1.32

Permits 1.39 down from 1.4

Friday: Existing a smidge higher…. more inventory, more sales.

Daily Bulletin:

https://www.cmegroup.com/daily_bulletin/current/Section23_Lumber_Options.pdf

Southern Yellow Pine:

https://www.cmegroup.com/markets/agriculture/lumber-and-softs/southern-yellow-pine.volume.html

The Commitment of Traders:

https://www.cftc.gov/dea/futures/other_lf.htm

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

Brian Leonard

bleonard@rcmam.com

312-761-263

11 Aug 2025
Agriculture, CME, Futures, Housing, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

LEONARD LUMBER REPORT: “Canadian producers get bailed out.”

The Lumber Market:

“Canadian producers get bailed out.” That should be the feature of the week. It nullified the reason for the upside premium futures were carrying by eliminating the shutdown risk. It also brought to light the amount of extra wood that is out there. Now I will say the industry has done a good job hedging it. The commercial shorts jumped 1088 last week to 7227. There was more added from Tuesday on. We could be sitting at 1800 to 2000 cars hedged today. That’s high. It also will limit the downside at some point. Those hedges take the cash wood off the market. Theoretically, once futures close into par levels those hedges will unwind.

This week we will see a different trade focus. After losing $43 in futures last week, we will start to look for either bottoming indicators or a flush. I would have bet last Monday that neither would have been in today’s comments. The problem with this run up has been all speculative at a time when OSB and SYP could find support. This week we have to look at the macro market for the next move. I’m just not seeing the appetite to add to the pile. We expected a two- or three-week downturn going into fall. That could have just started.

The mills have looked to print to cover the duties, any tariffs with an added profit on top. With the current demand, I’m not sure print can continue to be so far off. The question becomes if the market makes them give it back?

Technical:

The chart pattern is closing in on a trendline, the 200-day moving average and a gap. With a 31% RSI, I can’t look for this to act as any real support. A flush is defined as “emptying something out.” That is how the lumber market recalibrates itself, which never gives the common trader a chance to participate. The major support area is 620.10. That is the flush. Without outside help it will be tough to get there.

What could be changing is… The spread normally goes out towards expiration as the longs are the ones exiting. With the now large number of shorts, we have to watch how that liquidates. If we are sitting on September 1st with heavy open interest, the front spread may actually go in.

 

Daily Bulletin:

https://www.cmegroup.com/daily_bulletin/current/Section23_Lumber_Options.pdf

Southern Yellow Pine:

https://www.cmegroup.com/markets/agriculture/lumber-and-softs/southern-yellow-pine.volume.html

The Commitment of Traders:

https://www.cftc.gov/dea/futures/other_lf.htm

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

Brian Leonard

bleonard@rcmam.com

312-761-263

04 Aug 2025
Agriculture, CME, Futures, Housing, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

LEONARD LUMBER REPORT: IT IS 2 DOWN AND 1 TO GO

The Lumber Market:

It is 2 down and 1 to go. With the ADD and tariff day now out of the way all we have to contend with is the CVD at the end of the week. After that we have to live with a weakening jobs outlook and steady inflation. Prices won’t stay up here once the news cycle is over. There is no economic value up here. We are up here because of the risk of a major supply disruption. That is still a feature, but the timing seems to be further out. In the short run mills are coming back online after the summer shutdowns. The bottom line is that no one expected business to be this slow at this point. The market will need to correct after all the noise lets up. What announcements that come out could temper that sell off.

The mills do not have files. Why they wouldn’t sell the futures market at a good profit will always be a wonder. The industry does have inventory but that is slowly getting hedged. The one up factor in the market is that the funds are adding to their long position.

Technical:

It took until last Friday to finally close the gap in September. We talked about the gap back in early May. Things are back to slow and rough. It will now take a few years to get that new truck. This has been a perfect stair step higher market. It takes time and suffers setbacks. Presently there are no technical sign to call the cycle over. It does call for a correction. Momentum still points to hitting or taking out the high of 714.50.

Here is the trader’s fact sheet.

***Lock in the substantial profits offered and tell treasury to make the margin calls.

 

Daily Bulletin:

https://www.cmegroup.com/daily_bulletin/current/Section23_Lumber_Options.pdf

Southern Yellow Pine:

https://www.cmegroup.com/markets/agriculture/lumber-and-softs/southern-yellow-pine.volume.html

The Commitment of Traders:

https://www.cftc.gov/dea/futures/other_lf.htm

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

Brian Leonard

bleonard@rcmam.com

312-761-263

28 Jul 2025
Agriculture, CME, Futures, Housing, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

THE LEONARD LUMBER REPORT: The lumber industry is very efficient

The Lumber Market:

The lumber industry is very efficient. Supply can be added or reduce in days or weeks. That is why it is so difficult to gauge a supply driven market in lumber. The good news is that the cycles have definition. At the beginning of the year, it was a panic element throughout the industry with the pending duties and a tariff. The current rally is driven by a possible supply disruption. The next phases of the cycle are:

In these circumstances the market historically fails because of market efficiencies. It finds enough wood because demand is flat. I would caution anyone who believes the market is going back to the lows on this one. We’ve been saying for a few years that value is somewhat higher than the norm.

The duty numbers run from 10% to 35%. Today we heard the deal with European will add 15% to their costs. Prices are going up. The issue in futures is continuing to hold a $50 or more premium you may have to be in the $700’s by Friday. I’m not seeing the appetite to run it up. We did see a big increase in the industry shorts last week. Having less wood sitting at the mills and industry inventories hedged are bullish dynamics.

Technical:

The futures market consistently traded near $675. This is an established value area. What has been a significant red flag is the fact that with some much-forced price appreciation in front of us we continue to fail closing the gap. Each day we expect that area to find trading only to see the futures market take 10 minutes just to open. The lack of “volatility created” will be a factor in any run. That’s why you hedge.

 

Daily Bulletin:

https://www.cmegroup.com/daily_bulletin/current/Section23_Lumber_Options.pdf

Southern Yellow Pine:

https://www.cmegroup.com/markets/agriculture/lumber-and-softs/southern-yellow-pine.volume.html

The Commitment of Traders:

https://www.cftc.gov/dea/futures/other_lf.htm

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

Brian Leonard

bleonard@rcmam.com

312-761-263

21 Jul 2025
Agriculture, CME, Futures, Hedging, Housing, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

LEONARD LUMBER REPORT: The futures continue to stair step higher on its way to a new high for the move

The Lumber Market:

The futures continue to stair step higher on its way to a new high for the move. A stair step higher marketplace is one that sees a buying push followed by a stagnant confirmation period. It tends to be the norm in a supply driven market. This one is driven by the risk of higher prices due to duties and tariffs, so you basically have to drag the buy community to the market weekly. The buy side knows that there will be higher prices, and the producers will try to pass it along.

What is interesting on this one is the fact that every aspect of the industry is running on shoestring margins. A rising price/flat demand environment is difficult to navigate. For those who have been proactive buying the deals and out of the market a week or two are now suffering sticker shock. This cycle had been set since February. Prices will go higher because of outside influences. Futures will continue up until the shorts blow out. It’s really that simple.

What this blowoff looks like is hard to define given the very light open interest overall. Most of the spec side is long and the industry shorts are basis trades. We will see what it looks like after we get there.

Back to tight margins. In the last week or so we talked about a possible increase in supply from Europe, the pacific northwest and SYP. We have been showing the data of the gains in SYP over the last few years on the spruce market. With extremely tight profit margins, the SYP alternative will continue to be embraced. It has slowly creped north up to I80. In a supply driven market, the dollar equation is king. A few dollars in cost savings win.

Technical:

The market is forming a defined wedge pattern which calls for a $70 move. 672 is the top line and 635 is the bottom. With a 61% RSI there is room in both directions. Nothing is showing up in the momentum indicators to signal a possibility of a move to that degree, but it is there. Sept futures have traded a lot of volume between $660 and $670. That seems to be the “area of acceptance” with the headwinds or(tailwinds??) in front of our market. I would expect a knee jerk reaction up with 660 now becoming an area of support replacing the area of value. This market can easily go back over $700 and then test $600. Any delay in an announcement and $600 may come first.

Daily Bulletin:
Southern Yellow Pine:
The Commitment of Traders:
About the Leonard Report:
The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.Brian Leonardbleonard@rcmam.com

312-761-263
14 Jul 2025
Agriculture, CME, Education, Hedging, Housing, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

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 .

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:

Daily Bulletin:

https://www.cmegroup.com/daily_bulletin/current/Section23_Lumber_Options.pdf

Southern Yellow Pine:

https://www.cmegroup.com/markets/agriculture/lumber-and-softs/southern-yellow-pine.volume.html

The Commitment of Traders:

https://www.cftc.gov/dea/futures/other_lf.htm

 

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

Brian Leonard

bleonard@rcmam.com

312-761-263

07 Jul 2025
Agriculture, CME, Hedging, Housing, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

LEONARD LUMBER REPORT: We are closer. The end is near. No that is not a biblical prophecy, at least I hope not.

The Lumber Market:

We are closer. The end is near. No that is not a biblical prophecy, at least I hope not. Most of the announcements should be done in the next two weeks. That will hopefully put an end to all the chaos. Last week the market continued to walk itself higher. The main takeaway is the fact that the short funds are exiting their position. We saw that in Friday’s commitment of traders. We are also seeing it in the way the futures are trading. Normally the short funds will throw selling at the market to see if it could reverse the trend. We haven’t seen any of that. That is mildly bullish. Without their selling the only player left are the spec longs. They continue to push the market higher, but the discount mutes the intensity. Those are the mechanics we have been watching in the futures market. But what about the cash market?

If you step back and look at the cash dynamics, you will expect more of the same. Rallies occur when the market thins out and then falls right back after it. This steady takeaway business is three years old now. It does not create margin expansion and that limits any speculative buying. Today the speculative buying is going from 30 to 90 days inventory for jobs already booked. It is efficient and will not move the needle. The rally cry now is for more expensive wood making the inventory bottom line look better. I’m not sure that is a business plan to base the business on.

September is 667.00. In the next two weeks we will shift from analyzing what value should be to what value is. The guessing will finally get answered. That’s why I believe if we are going substantially higher it will have to be in the next few weeks.

Technical:

The futures market has now checked off all the objectives up to the gap. Momentum definition showed that if the market hit $650 it would go into the gap. It was the same in July noting a close over $600 sets it up for a run to the gap. There is nothing from here up that will call for a new higher objective.

The technical read that has not been recognized is the fact that September hit a high of 714.50 back in late March. The futures market was higher not too long ago. It also traded volume at those higher levels. The low $700’s are a real objective in Sept. Nothing fundamentally has changed since then excepted for a few more closures. Buy the rumor, sell the fact created a run up followed by a selloff of $120. Hedging is a must but continue feeding them in. Given the current demand equation, getting through the gap will be the challenge.

Daily Bulletin:

Southern Yellow Pine:

The Commitment of Traders:

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

Brian Leonard

bleonard@rcmam.com

312-761-263

01 Jul 2025
Agriculture, CME, Futures, Hedging, Housing, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

THE LEONARD LUMBER REPORT: The futures market continued its trek higher on a journey to find real price discovery

The Lumber Market:

The futures market continued its trek higher on a journey to find real price discovery. A report midweek about two SYP mills taking downtime confirmed the reality of less product in the future. But at the same time we saw more weak housing news compounding the problem. Add to it that Trump in now loading both barrels and pointing it at Canada. The possible 25% tariff just keeps showing up. What we do see is many items holding lower levels because of the lack of demand. There is no reason to wait on these items in today’s environment. As long as the industry procrastinates the more chance there is for a spike higher when the SHTF. If it turns out to be a non-event, sell the board.

Technical:

The midweek gap in September from 648.50 to 649.50 is a momentum gap. We can come back and close it early in the week making it more of the same or we can see additional momentum following it up. That would bring the 4-month gap of 673.00 to 708 into play. I do have an issue with a 76.80%. That is toppy without the momentum. I will say it could be less of a fact when we analyze the trade. The market shot up with the tariff announcements. These has been no resolution to it. Whatever the catalyst for the initial rally, a precedent was set. Any movement towards a tariff again pushes prices back up there.

This could take some time to play out. Owning cash at low levels with a good basis available has been the play for 3 years now. Today there is too much wood out there. It doesn’t mean you shouldn’t own some.

 

Daily Bulletin:

Southern Yellow Pine:

The Commitment of Traders:

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

Brian Leonard

bleonard@rcmam.com

312-761-2636

23 Jun 2025
Agriculture, CME, Futures, Hedging, Housing, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

LEONARD LUMBER REPORT: Just when we thought we had seen it all this year, the US bombs Iran

The Lumber Market:

Just when we thought we had seen it all this year, the US bombs Iran. With that news we see the TASE at all-time highs today. If nothing else, it is weighing on the psyche of the investor. That in turn makes the big decision of home buying more difficult. And that will keep demand and building muted. So where is the risk in the next 3 months? The biggest is risk is to the producers. The Canadians will see higher costs that can’t be passed along. The US producers, especially down south, will see prices fall below breakeven. Looking at the other risk, it is on those holding jobs short. The producer side could just shut it down causing a major temporary spike in prices. The buyer could get stuck in the middle of it. It is a mess. Now as far as the middle trader goes, volatility carries a premium in markets. They should benefit.

Last week July futures were off $10.50 on a trade dominated by the roll. The market makeup has the industry getting short eating up the funds exiting. The only other feature is that the yahoo’s are getting longer. The debate is which month is better to be speculatively long. The closer July gets to no limits the less it should be traded. Time holds the answer. Once the funds are done with the July buy side there won’t be much support.

Technical:

Technically the July is still in the neutral zone while the September is rolling over. That is the opposite of what most expect. The tech read is very fragile so not much of a run up would reverse it. They whole picture holds little opportunity. Most are relying on the pending price increases forced on the Canadians.

$100 crude is not helpful.

Daily Bulletin:

Southern Yellow Pine:

The Commitment of Traders:

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

Brian Leonard

bleonard@rcmam.com

312-761-2636

16 Jun 2025
Agriculture, CME, Futures, Hedging, Housing, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

LEONARD LUMBER REPORT: Futures were up $20 for the week

The Lumber Market:

Futures were up $20 for the week. It is a market doing a good job in developing price discovery in a chaos environment. Saturday, I  was asked to be on a call with an equities team who wanted to know what was causing the uptick. These guys a very inflation sensitive. I explained that between the CVD, AD and, tariffs prices from Canada will be going up. To what level remains to be seen. They were quick to point out that the US and European capacity could be increased. I pointed out that the quarters it would take to be a factor is too far off to put into a 2025 equation. What about demand? We are here because demand has been flat for 3 years. A macro look shows that we are fighting for every dollar higher as usual. July hit 710.00 back in early March. The futures market is actually near its low end of the range. We are flat. The trade today is trying to find a new equilibrium trading range. This is not a supply driven rally, at least not yet. It isn’t a demand push either. The rally is spec shorts covering and short funds covering via the roll. Nothing more, nothing less. I do see and uptick in the industry hedging up here. Good move.

Technical:

The RSI is 75.60. A grind to the next points of 642 and then 655 are in reach. Once we hit the gap we may have to take a closer look. The 200 day is at 618.50. History has shown us that this ends in a quick thud, so a risk management plans need to be in place. Just stair step in higher. There is no need to rush into it. The marketplace should drag the cash marginally higher.

Daily Bulletin:

Southern Yellow Pine:

The Commitment of Traders:

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

Brian Leonard

bleonard@rcmam.com

312-761-2636

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