I final wrote concerning the lumber market and its worth motion on Barchart on August 21, 2025, the place I concluded with the next:
The offseason for lumber demand is on the horizon. The potential for elevated worth variance as a result of uncertainty created by U.S.-Canada commerce relations stays excessive, and the trail of least resistance of U.S. short-term rates of interest is prone to be decrease. Time will inform if longer-term charges comply with any Fed Price cuts over the approaching months. Lumber stays a vital building materials, and the present worth ranges supply a optimistic risk-reward profile. Accumulating lumber-related belongings on a scale-down foundation in periods of worth weak point over the approaching weeks and months may very well be optimum for 2026, offered the housing market improves and lumber demand rises.
The active-month lumber futures have been buying and selling at $595 per 1,000 board toes on August 19 and have been decrease, with January futures across the $530 stage in late November. In the meantime, the WOOD and CUT ETFs, in addition to WY shares, have declined since August 19, which may current a possibility for 2026.
The each day steady CME bodily lumber futures chart for January 2026 supply highlights a uneven 12 months.
January 2026 lumber futures have traded in a $527.50 to $699.00 per 1,000 board toes vary in 2025. Lumber futures have been trending decrease since reaching a excessive of $698.50 on August 1, and have been at $532, close to the lows of 2025 in late November. On August 19, the January lumber futures settled at $595.50 and have been 10.7% decrease in late November.
Whereas lumber futures have been underneath strain, the 2025 vary has been pretty slim, provided that the random-length lumber futures contract traded to a 2021 excessive of $1,711.20 and a 2022 peak of $1,477.40 per 1,000 board toes. In each years, the low worth was decrease than the 2025 low, highlighting the slim buying and selling vary for wooden costs in 2025.
On August 19, the iShares World Timber & Forestry ETF (WOOD) settled at $74.52 per share.
In late November, the WOOD ETF was 9.1% decrease at $67.74.
On August 19, the Invesco MSCI World Timber ETF (CUT) settled at $30.68 per share.
In late November, the CUT ETF was 9.2% decrease at $27.86 per share.
The WOOD and CUT ETFs saved tempo with the continual bodily lumber futures over the interval.
On August 19, the shares of the Weyerhaeuser Firm (WY) settled at $26.33 per share.
In late November, WY shares have been 18.5% decrease at $21.46 per share. WY has underperformed lumber and the WOOD and CUT ETFs since August 19, 2025.
The case for buying lumber publicity by means of the WOOD and CUT ETFs, and WY shares contains:
The lumber market tends to succeed in its highs in spring and early summer time and its lows in late fall and winter, pushed by demand in the course of the building season.
Contemplating lumber futures’ worth vary (random-length and bodily) since Might 2021 has been $1,711.20 to $352.50 per 1,000 board toes, lumber futures are lots nearer to the low than the excessive, suggesting that there’s restricted draw back.
U.S. tariffs on Canada, a big lumber provider, may proceed to distort costs, rising worth variance.
The prospects for falling U.S. rates of interest in 2026 may help new house constructing and lumber demand. Decrease mortgage charges may set off a surge in new house demand.
As lumber is now within the offseason for demand, this may very well be a wonderful time to start accumulating lumber-related belongings for the approaching 12 months. WY shares have declined probably the most, making the corporate enticing close to the $21.50 per share stage. WY’s dividend at $0.83 interprets to a 3.9% yield. WY beat EPS and income forecasts in its most up-to-date October 30, 2025, earnings report. The WOOD ETF holds 5.14% of its belongings in WY shares, whereas CUT’s publicity is 4.88%.
If lumber costs recuperate, WOOD, CUT, and WY shares may transfer larger from present ranges subsequent 12 months. I favor accumulating these lumber-related belongings on a scale-down foundation, leaving loads of room so as to add on additional declines over the approaching weeks and months, as lumber will stay within the off-demand season till subsequent spring. The highs in 2021 and 2022 have been in Might and March, respectively.
In the meantime, lumber futures stay extremely illiquid, with solely 9,055 contracts of open curiosity, the entire variety of open lengthy and quick positions within the bodily lumber futures market. Whereas illiquidity makes lumber futures extremely harmful, it will probably additionally trigger substantial worth rallies, as gives to promote can evaporate as costs rise.
Because the lumber market heads into winter, decrease lows are possible. Nonetheless, the decrease costs fall, the better the percentages of a restoration in 2026, as lumber costs may very well be ready for spring to soar.
On the date of publication, Andrew Hecht didn’t have (both instantly or not directly) positions in any of the securities talked about on this article. All info and knowledge on this article is solely for informational functions. This text was initially revealed on Barchart.com
