The great long liquidation. Between Monday and Tuesday, it looked as if the industry longs blew out. That was after a previous week of light liquidation. This blowout pushed July’s futures to a low of 484, which is at par with the cash market. That was a structural change to the market dynamics and should be noted for the future. By Thursday, July was back to a $30 premium and showing some confidence. So, in the short run, we are considering trading par too cheap at a $30 premium normal, and a $50 premium as a gift.

We are entering the summer months with some tough headwinds. We were told “rates higher for longer” 18 months ago. They were right. Any rate relief in housing isn’t coming soon. The other is the sharper-than-expected drop in multifamily projects in the regions that have led the way. Some are as high as 40%. As a trader, this is a lot to digest, but it looks like the market has already started.

RDFTV is a farmer’s channel. On Friday, they interviewed a SYP tree farm owner. He said SYP farmers never lose money. He must not have gotten the memo on the falloff of the multi-sector.

The cash market looks to have three zones of value today. The first is the current zone of $335 to $450. The market has spent a lot of time down here as it digests the less demand and good supply scenario we are in. The next is $451 to $500. And the last is $501 to $600 or shall we say the happy days are here again zone. It has bounced back and forth between zones 1 and 2 since the end of covid. It is not getting any help from the fundamentals to change that.


The value areas and technical points are becoming a better road map than in the past. The two featured points today are the 200-day moving average at 562.50 and the value area at 440.00. That correlates well with the cash zone. The support area is the low of 484.00, and resistance is the value area of 520.00. A break of either could cause a nice little run.

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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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