From today's WSJ....Been in the forest products industry 50 years so old school but as a leading indicator still valid. Inventory channels are stuffed.
Lumber Prices Are Flashing a Warning Sign for the U.S. Economy
Wood prices are sliding and mills are cutting back because of uncertainty over tariffs and a building slump
By
Ryan Dezember
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Sept. 8, 2025 9:00 am ET
 Logs are sorted in British Columbia, where lumber mills are being squeezed. Photo: James MacDonald/Bloomberg News
Quick Summary
Lumber futures have dropped 23% since early August, ending last week at $535 per thousand board feet.
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Falling lumber prices are sounding an alarm on Wall Street about potential problems on Main Street.
Wood markets have been whipsawed of late by trade uncertainty and a deteriorating housing market. Futures have dropped 23% since hitting a three-year high at the beginning of August and ended Friday at $535 per thousand board feet.
The price drop might have been greater—but two of North America’s biggest sawyers said last week that they would curtail output, slowing the decline.
Crashing wood prices are troubling because they have been a reliable leading indicator on the direction of the housing market as well as broader economic activity.
During the Covid-19 lockdown, two-by-four prices nearly tripled the prepandemic record, an early sign of the inflation and broken supply chains that would bedevil the economic reopening. When the Federal Reserve began raising interest rates in 2022 to curb inflation, lumber was among the first assets to decline in value. Now, prices are signaling caution again.
Oct. 2024'25475500525550575600625650675$700per 1,000 board feet
A glut of lumber was piled up stateside earlier this year in anticipation of higher duties on Canadian imports and additional tariffs on wood threatened by President Trump.
Lumber prices have been on a roller coaster. They rose in the spring after the White House said it was investigating national security aspects of imported lumber and Trump threatened steep tariffs on all Canadian goods.
They crashed when he backed off Canada. In May, they started surging again as buyers began stocking up ahead of the scheduled hike in existing Canadian lumber duties and Trump’s threatened tariffs.
Stinson Dean, a former lumber trader and co-founder of Indiana truss manufacturer Revol Building Solutions, said buyers were more focused on the import taxes than demand when they bid up prices.
Unsure whether there will be tariffs, Dean decided not to stock up and instead has taken a hand-to-mouth approach to supplying his plant, which prefabricates structural framework.
“I was going to lose money because tariffs happen, or I was going to lose money because there were no tariffs,” he said. “It was 50/50 either way. So, I sat on my hands.”
On-the-spot prices are down too, according to Random Lengths. The trade publication and pricing service’s Framing Lumber Composite Index has declined about 12% since Aug. 1.
 U.S. lumber producers like Washington’s WKO sawmill have successfully argued for trade protections against cheaper Canadian imports. Photo: Celeste Noche for WSJ
Producers are responding by cutting back.
Interfor, North America’s third-largest lumber producer, said Thursday that it will choke back output by 12% with cuts across its sawmills in the U.S. South, Pacific Northwest, British Columbia and eastern Canada. It will reduce hours and reconfigure shifts as well as lengthen holiday breaks and maintenance shutdowns to reduce production by about 145 million board feet through year-end.
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Domtar, another big producer, is taking downtime at its sawmill in Glenwood, Ark., indefinitely idling another in Maniwaki, Quebec, and eliminating a shift at its facility in the province’s Côte-Nord region, a spokesman said.
Analysts and traders say there will have to be further cuts to ease the glut of wood. That might not be a problem, given how higher duties have pushed up Canadian sawmills’ break-even prices while demand wanes.
“We anticipate further closures or curtailments,” said Truist Securities analyst Michael Roxland.
 President Trump has called for greater timber harvests from federal land, such as Oregon’s Siuslaw National Forest, to replace imported wood. Photo: Celeste Noche for WSJ
The White House is still contemplating broad tariffs on imported wood in the name of national security, as it has with aluminum, steel and copper products. Any tariffs from Trump would be separate from the existing duties levied on Canadian softwood lumber imports, which fulfill about 24% of U.S. consumption.
Those antidumping and countervailing duties are the result of a decadeslong trade dispute. They rose last month to about 35% for most Canadian producers, from 15%. The heavily litigated rates are reset annually based on Canadian exporters’ sales data from two years prior.
Before the duties rose, Canadian mills that manage inventories for big customers ranging from home centers to wholesalers filled warehouses and distribution centers, said Matt Layman, a market analyst and consultant who publishes Layman’s Lumber Guide. That means they already have plenty of unsold lumber near its final destination.
July 2021'22'23'24'251.31.41.51.61.71.81.92.0million units
“Producers were so confident, they overlooked one glaring obvious hurdle while piling up lumber in the U.S.: demand or lack thereof,” he said. “There is easily enough wood on the ground in the U.S. to cover several months of anticipated fall demand.”
Residential building permits dropped in July to a seasonally adjusted annual rate of about 1.4 million units, the fewest since June 2020.
Total U.S. construction spending was down 3.4% in July from the record set in May 2024.
Yet mortgage rates have lately trended lower, and Wall Street is pricing in near certainty that the Fed cuts rates at its meeting later this month, according to CME’s FedWatch Tool.
Cheaper borrowing costs could spur more construction and home buying as well as entice homeowners to borrow against their properties to fund repairs and renovations, which are the single greatest source of lumber demand.
Write to Ryan Dezember at ryan.dezember@wsj.com |
