Lumber fell the most allowed by the Chicago Mercantile Exchange on declining construction in the U.S. and Canada and speculation that wood processors will not curb production, adding to already ample supplies.
The value of Canadian building permits tumbled more than five times as much as expected, falling 11 percent, because of drops in single-family houses and commercial buildings, Statistics Canada said today. Economist surveyed by Bloomberg News expected a 2 percent drop. U.S. payrolls grew by 83,000 in June, fewer than expected, the Labor Department said last week.
“We’re not seeing anything good on the housing-demand side, and people are nervous about how much production there is out there,” said Paul Quinn, an analyst at RBC Capital Markets in Vancouver. “I see us staying in this $180 to $220 range for a while until get some direction in the housing market.”
Lumber futures for September delivery fell the limit of $10, or 4.6 percent, to $209.40 per 1,000 board feet in Chicago. Lumber has plunged 38 percent since its 12-month high on April 21 on sluggish demand for building materials.
Construction spending in the U.S. declined 0.2 percent to $841.9 billion in May, the first such drop in three months, as homebuilders cut back and work on commercial projects decreased, the Commerce Department said on July 1.
Quinn said he foresees little housing demand until late August or early September.