Lumber Jumps as Trudeau-Obama Meeting Fuels Hopes for Trade Pactby
Canada, U.S. see resolution to latest softwood lumber dispute
Futures prices rise to touch eight-month high in Chicago
Lumber prices touched an eight-month high after a state visit to the U.S. by Canadian Prime Minister Justin Trudeau raised expectations that the latest chapter in a long-simmering trade dispute is closer to being resolved.
Futures for May settlement rose 3.6 percent to their daily limit of $291.60 per 1,000 board feet at 12:45 p.m. in Chicago, the highest intraday price for a most-active contract since July 14.
The two nations have long sparred over softwood lumber, with the dispute gathering steam in the early 1980s when U.S. lumber companies complained Canada gave producers access to cheap timber on government land. The 2006 Softwood Lumber Agreement expired last fall and both countries have until October to iron out a new trade accord, after which U.S. companies can file new trade cases against Canadian imports.
Trudeau brought up the dispute at a meeting with President Barack Obama in Washington on Thursday and said he’s confident the two countries can find a solution in the coming weeks and months. Comments from both sides point to the conclusion of a new, compromise deal before the deadline, Bloomberg Intelligence analyst Caitlin Webber said Friday in a note.
A new accord would probably boost prices as imported Canadian lumber will be subject to a tax at the border, Paul Quinn, an analyst at RBC Capital Markets in Vancouver, said in an interview.
"We would expect benchmark lumber prices to rise following the reintroduction of a trade deal," Charles Gross, an analyst at Morningstar Inc. in Chicago, said via e-mail.