LEONARD LUMBER REPORT: Futures rallied nearly $30 last week

Futures rallied nearly $30 last week and more than $60 over the last two weeks. That is a substantial move. The rally actually began back in November 2025 and is now up roughly $170 from those lows.

The data is not showing a major increase in demand. We have been seeing production slow over time, but is that enough to justify a $60 move in two weeks and a $170 advance overall? The funds may think so.

Open interest bottomed near 6,200 and now sits above 8,000 after only a few sessions. The Commitment of Traders report shows an increase in fund longs, but also a jump in industry participation on both sides of the market.

The pace of the cash market remains muted, yet prices continue to grind higher. Futures will need willing buyers at these levels to sustain the rally. If futures continue higher, the cash market is likely to follow.

From a macro perspective, this market is increasingly becoming a debate between balance and imbalance. We came into the year with what appeared to be a fairly balanced supply-and-demand picture, alongside an oversupplied housing market. Today, that housing oversupply is beginning to come down. Again, is that enough to justify the move? Probably not unless interest rates begin to decline.

Another question mark that emerged last week was the shift in economists’ views on true housing demand. The loss of immigration and an aging population suggest that less housing supply may be needed than previously believed. Will builders be forced to lower their outlooks on a year-over-year basis? That question could add another layer of volatility to the trade, and it may already be contributing to the current rally.

The futures run early in the week pushed the market into overbought territory. The Thursday-Friday trade corrected some of that condition, which is a healthy development.

What to watch now is the technical picture. The short-term moving averages are close to crossing above the 200-day moving average for the first time in years. That is a very positive indicator, but it is not necessarily a buy signal. It may simply be confirming the thesis that the typical trading range has shifted higher.

The key level this week is 660.00. That represents the 81% retracement of the 2025 trading range. A close above 660.00 could open the door to a push back toward 700.00.

A modest correction would be healthy. The last move to 700.00 was driven largely by noise. If the market makes another run at that level, the driving force this time appears more likely to be fund participation. Let’s give it a few days and see how it develops.

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