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Lumber Lowdown: Understanding the Roots of Lumber Volatility and Future Market Expectations

Lumber Lowdown: Understanding the Roots of Lumber Volatility and Future Market Expectations
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From Trees To Lumber, Sawmills Boost Profits As Crack Spread Erupts

by Tyler Durden Wednesday, Apr 21, 2021 - 03:07 PM Lumber prices soared to new records on Tuesday morning but faded in the afternoon following new concerns of COVID-19 pushed commodities and equities deep into the red.  In this commodity note, we re going to concentrate on the lumber prices over the stumpage fee, the price a firm pays for the right to harvest timber from a given area. Think of this ratio as the lumber crack spread, sort of like how the oil industry measures the profitability of an oil refinery (crack spread) by taking the difference between the price of crude oil over petroleum products. 

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