Lumber prices shot higher this week, reaching the highest price in more than 18 months, spurred on by a stronger housing market.
On Wednesday, the U.S. Commerce Department released figures showing new home construction in September reached an annualized rate of 872,000, the highest figure in more than four years. Lumber rallied more than $20 per thousand board feet (7 percent) this week, reaching $318.70 on Friday morning.
Despite the recent rebound in housing activity, annual housing starts are still down sharply from their peak above 2,000,000 during 2004-06.
Likewise, lumber prices are still depressed compared to their 2004 high of over $460.
Next week, lumber traders, builders and homeowners will be focused on new government data showing new home sales and pending home sales, which could give more insight into the strength of the current housing market.
Where’s the Cotton?
Cotton rallied to a five-month high Thursday on news that cotton held in the ICE exchange warehouses had reached a 17-year low. This occurred as a result of generally low supplies and low-quality cotton being rejected by the exchange.
Cotton prices rose almost 8 cents per pound (11 percent), to 79.19 cents during the week.
Skeptics claim that the tight cotton supply situation has been over-hyped since the cotton harvest will be in full swing soon, alleviating the current shortage. The United States is the world’s largest cotton exporter, and our harvest can have a major impact on global prices.
As of midday Friday, cotton for delivery in December was worth 77 cents per pound.
Kansas City Joins Chicago
CME Group, which controls most of the major U.S. futures exchanges, announced on Wednesday that it was acquiring the Kansas City Board of Trade.
The KCBOT had been a major center of wheat trading since the mid-1800’s when the exchange opened. The wheat contract traded in Kansas City is known as hard red winter wheat, prized for its high protein content, which makes it suitable for bread products.
As of midday Friday, KC wheat for delivery in December was trading for $9.13 per bushel.