After several quarters on the low side, lumber prices tanked even further this week to the lowest level in 17 years on the Chicago Mercantile Exchange. Lumber futures for November delivery dropped $10 -- the upper limit of the exchange -- to $186.50 per 1,000 board feet, the lowest since 1991.
According to Bloomberg News, output in Canada, the world’s top lumber exporter, had fallen 22 percent in the seven-month period ended July 31.
The news service quoted Curt Cunningham, the president of Pacific Futures Trading Co. in Seattle, as saying, “As we go into winter, which is the end of building season, and with the current financial and mortgage crisis, who's going to want to own lumber? Most dealers are worried about what they thought was a 30-day supply of lumber turning into a 90-day supply.”
Lumber dealers have been steadily closing locations of late, and producers are feeling the pinch of long-term low lumber prices earlier this week. Louisiana-Pacific announced a third round of layoffs, with 28 people to be cut from the company’s work force. Late last month, Temiscaming, Quebec-based lumber producer Tembec announced it will curtail sawmill production at two British Columbia locations -- Elko and Canal Flats.
Numerous lumber mills and dealers have decided to close, such as Beacon Lumber, a family-owned lumber and hardware dealer in New Bedford, Mass., which said last month it plans to close and auction off its lumber division.