CHICAGO Feb 20 U.S. lumber futures fell 1.7
percent, touching the lowest level in two weeks, on Wednesday
after housing starts declined and fell below analyst
expectations, traders said.
Lumber futures were headed for their biggest two-day slide
in a month after hitting a nearly eight-year peak on Monday.
CME lumber for March delivery climbed above $400 per
thousand board feet for the first time since April 2005 on
Monday before declining by as much as the $10 per tbf daily
Lumber futures nearly fell the trading limit again on
Tuesday before trimming losses, trading $6.90 lower at $382.90
per tbf as of 12:25 p.m. CST (1825 GMT).
"We went up way too soon," Robin Cross, chief operating
officer at brokerage Paul Court Company, said from the trading
floor at the Chicago Mercantile Exchange.
"The market is definitely better but housing is just
grinding better. There's some underlying confidence but we don't
want to get ahead of ourselves," Cross said.
Groundbreaking on new U.S. homes declined 8.5 percent in
January to an annualized rate of 890,000, below expectations of
925,000, data from the U.S. Commerce Department showed.
Quarterly results from Toll Brothers, the largest
luxury homebuilder in the country, also missed expectations,
further pressuring wood prices.
Still, single-family unit housing starts were the highest
since July 2008 while permits for building permits for new
construction also jumped to a 4-1/2 year high.
Futures had also been trading at a premium to cash, with
benchmark western spruce pine fir priced late last week at $390
per tbf, according to Random Lengths, which tracks prices and
trends in the lumber market.
"Premiums at such historically high prices are difficult to
maintain so the second we broke, we had a very bearish move that
led to some technical selling today," Cross said.