Lumber futures rose to the highest in a month as some of Canada’s biggest producers reduce output and transportation snags disrupt shipments to customers.
March futures rose by the exchange limit of US$45 Wednesday to US$1,336 per US$1,000 board feet in Chicago before paring gains. The surge comes as firms such as Canfor Corp. announce supply cuts in British Columbia, while port congestion and a lack of rail cars and trucks make it harder for Canadian companies to get timber to buyers.
“In Western Canada these transportation challenges are really unprecedented in both scale and duration,” West Fraser Timber Co. Chief Executive Officer Ray Ferris said Wednesday on an earnings call.
Lumber futures have already gained about 34 per cent this month as supplies remain tight ahead of the peak spring construction season in North America. That may add to the housing inflation that’s already hurting buyers.
Canfor said Tuesday it plans to cut 150 million board feet of production in British Columbia, citing impacts of the mountain pine beetle infestation and other constraints on available timber. At the same time, West Fraser said companies are facing shipping snarls after massive flooding late last year washed away rail tracks and shut highways in British Columbia.
While repairs to rail and truck routes are progressing, West Fraser said its ability to “ship products in a timely manner remains challenged” and the company said it was forced to take “unscheduled downtime” due to the transportation problems, according to a statement. The company may need to further reduce operating schedules to manage its inventory levels.
Shipments to Vancouver have been most affected amid port congestion and a shortage of containers, West Fraser executives said.
“Our biggest concerns are just shipping what we’re making today,” Ferris said.
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