LEONARD LUMBER REPORT: Last week, many “new-news” were created
Last week, many “new-news” were created. There were new lows in futures, new lows in cash, new highs in industry longs, and the list goes on. Market participants have turned their ire or blame toward Southern Yellow Pine. The data isn’t in line with such a bearish market. The data lag has kept us all on a constant watch for the bounce. I’m beginning to wonder if that bounce is a unicorn. As we clean up July next week and traders get back to work, we should expect some corrections.
The facts are most have reduced inventories. It has been a while since there has been a good buy round. This is not the time of year for that, but since it’s been so long, it may come early. There are shutdowns going on. It does not move the needle but will add up at some point. If there is going to be an imbalance, we should see futures acting more friendly. After hitting new lows last week, maybe not going down is all we can muster to define friendly. The sleeper is that business isn’t dead. It trades at a price. If that is a fill-in business, then the market can get friendly. If it is forward buying for the fall, then it is over.
Technical:
September has a trendline that speaks volumes. In place since March, it has become a tremendous resistance line. Close over it this time, and maybe we have something. That said, treat it like major resistance until it isn’t. It comes in at 493.80.
Daily Bulletin:
https://www.cmegroup.com/daily_bulletin/current/Section23_Lumber_Options.pdf
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
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