lumber cost

A contract for 110,000 board feet of lumber traded for as much as $320 in mid-March before plummeting below $220 in mid-June. Now lumber is rising again and it could be one of those times when supply can’t keep up with demand. But not for the usual reasons.

Traditionally, homebuilding soaks up a lot of U.S. timber production, but the market for new houses is very soft and has been for two years or more. Timber companies have been supported primarily by exports to Asia and real estate sales. Timber producers like Pope Resources LP (NASDAQ: POPE), Rayonier Inc. (NYSE: RYN) and Plum Creek Timber Co. Inc. (NYSE: PCL) have seen share prices rise from nearly 20% to more than 80% in the past 12 months. The Guggenheim Timber ETF (NYSE: CUT) is also up more than 20% in the past 12 months. Weyerhaeuser Co. (NYSE: WY) and Lumber Liquidators Holdings Inc. (NYSE: LL) have seen stock prices fall — Weyerhaeuser when it converted to a REIT in July 2010, and Lumber Liquidators last week when the company cut its forecast for 2011.

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