CME lumber surges to end limit-up for second day

CHICAGO Nov 17 (Reuters) - Chicago Mercantile Exchange lumber futures surged another 4.4 percent and posted the daily $10 per thousand board feet trading limit for the second consecutive day amid further fund buying, traders said.

Futures will have an expanded $15 per tbf trading limit on Wednesday following the two days of limit gains in the January contract.

Fund buying on a weak dollar and the outlook for higher commodity prices boosted futures the past few days. This caused the market to turn technically strong when it broke through a long-term trend line on the charts.

"Funds have been buying gold, crude oil and whatever and there just seems to be a consensus that the weaker U.S. dollar means that you need to be long commodities," said Curt Cunningham, president of Pacific Futures Trading.

Cunningham and other traders noted that the technical strength and fund buying that lifted futures also prompted cash lumber markets to follow suit.

"I know that West Fraser has gone to $220 in cash after being $190 a week ago and has sold some there. But I guess, in my opinion, without the leadership from futures the cash wouldn't be nearly as strong as it seems to be," he said.

"General consensus is there's not much wood in the wholesale distribution pipeline and that has left guys scrambling for product," Cunningham added.

* January lumber 2LBF0 closed up the $10 per tbf limit at $239.50 and March 2LBH0 was up $8.10 at $257.00. March through July 2LBN0 posted contract highs.

There were 30 unfilled buy orders at limit-up in January at the close.

* Random Lengths on Friday reported cash spruce at $202 per tbf, up $8 from Wednesday and up $10 from a week ago. Expectations are that they will raise that price in Wednesday's midweek report.

* In other news, U.S. home builder sentiment held steady at a low level in November, according to a survey taken by the National Association of Home Builders before the government extended a popular tax credit for first-time buyers. [ID:nWEQ003591

* Also, new U.S. home building and permits to start new houses likely climbed in October, based on a Reuters survey of economists. Housing starts are expected to have climbed by about 1.7 percent to 600,000 annual units on a seasonally adjusted basis from 590,000 in September, based on a poll of 73 economists ahead of the Commerce Department report on Wednesday. [ID:nN17314691] (Reporting by Jerry Bieszk)