Lumber as Supply or Speculation
Investors seem certain that inflation is here and more is coming. But should they be? Consider this chart comparing different forms of Lumber pricing including LBS futures, Timber ETFs, and stocks (HD and LL) that are retail outlets for lumber. Lumber's dramatic rise is being followed up by a dramatic fall. LL may be a leading indication for lumber prices and if it is, then this commodity as further to fall.
But does that fall represent supply coming back on line? or just simply a decreased in the commitment level of speculators. Either way, lumber looks like a good short right now. The important question here is whether lumber prices are signaling that inflation will soon slow. With the dollar on the rise, this seems plausible.
But does that fall represent supply coming back on line? or just simply a decreased in the commitment level of speculators. Either way, lumber looks like a good short right now. The important question here is whether lumber prices are signaling that inflation will soon slow. With the dollar on the rise, this seems plausible.
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