As government-imposed lockdown measures confined hundreds of millions of Americans to their homes, many began to entertain DIY projects they previously hadn’t the time or resources to complete. Over 75 percent of homeowners surveyed by Porch.com in July 2020 had completed a home improvement project since the beginning of the pandemic. Would-be craftsmen who have waited until now to begin renovations may be out of luck, however––over the past year, the price of lumber has skyrocketed, and home project expenses have risen with them.

From a price of $259.80 per thousand board-feet (the standard unit of lumber trading) on 1 April 2020, on Friday 7 May 2021, the price of lumber had risen to $1,686 per thousand board-feet as the DIY boom coincided with dire challenges to the lumber industry, including increased home building, mill closures, and staffing shortages.

Construction crews began to build homes with scarce materials, exacerbating shortages. Even a year on, mill capacity is limited, and production simply cannot meet the booming demand.

Lumber’s meteoric price rise has been unprecedented. In the futures markets, where producers and users of commodities trade to hedge against unanticipated changes of price over longer periods of time, lumber markets have typically been among the most quiescent, especially compared to crude oil, gold, natural gas, and soybeans. In fact, lumber contracts have typically been neck-and-neck with frozen concentrated orange juice (FCOJ) contracts at the bottom of daily trading volumes ranked among all such derivatives. Indeed, with only a handful of exceptions between the mid-1980s and late 2019, the price of lumber per thousand-board feet has traded somewhat listlessly between $200 and $500. Yet front-month lumber has risen 450 percent between the end of 2019 and the end of April 2021, with the period between March 26 and April 19, 2021 showing an unbroken run of 16 daily price increases and a number of limit-up triggers along the way.

Without suggesting that the rise in prices has been purely speculative, perhaps the modern embodiment of Joseph P. Kennedy Sr.’s barometer of frenzy––stock tips from shoeshine boys––is found in the burst of TikTok videos taking notice of prevailing market conditions. (Many employ the hashtags #lumberprices and #woodprices.)… CLICK for the complete article