CME lumber falls as much as 2.7 pct on slow cash

CHICAGO Dec 4 (Reuters) - Lumber futures on the Chicago Mercantile Exchange continued to slip on Friday amid slow cash trade and continued long liquidation following the end to the Canadian National Railway engineers strike.

* January declined nearly 1.8 percent and March fell 2.7 percent by the close.

* Futures have been falling since the end of the strike, with the market again taking a closer look at lumber demand.

* The housing market continues to bottom out, but building of new homes remains sluggish and that will keep demand for lumber spotty, traders said.

* January lumber 2LBF0 closed down $4.00 at $224.50 per thousand board feet and March 2LBH0 was down $6.70 at $244.50. January set a near two-week low.

* Lumber futures set contract highs early in the week amid talk the Canadian rail strike could slow lumber shipments into the United States, but have fallen sharply since.

* Industry sources said there is more than enough wood to meet the slow pace of home building and removing the rail strike concern prompted longs to exit the market.

* Canadian National Railway Co (CNR.TO) (CNI.N) resumed labor talks on Thursday with its locomotive engineers after a brief strike, with a one-week deadline to reach a deal on wages, benefits and contract length. [ID:nN0396118]

* Random Lengths on Friday reported the cash spruce price at $232 per tbf, unchanged from Wednesday but up $8 from last week, after gains early in the week.

* "Trading cooled in the second half of the week after a fairly active start that pushed many framing lumber prices higher. Buyers staying in the market drew confidence from strength in futures and a brief engineers' strike of CN Rail," Random Lengths said.

* "But with the railway's labor dispute settled at midweek and a pullback in futures, the cash market quieted Thursday. Secondaries turned their focus to selling, but not before mills extended files and upped prices," they said.

* "Impending year-end shutdowns left some mills with little to offer before January. Log shortages were an additional constraint on production at western mills," the reporting agency said. (Reporting by Jerry Bieszk; Editing by Walter Bagley) ((jerry.bieszk@thomsonreuters.com; 312-408-8725; Reuters Messaging: jerry.bieszk.reuters.com@reuters.net)) ((For help: Click "Contact Us" in your desk top, click here [HELP] or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com ; +1 646-223-5546))