CHICAGO, Oct 12 (Reuters) - Chicago Mercantile Exchange lumber futures rallied after posting contract lows last week and ended up 4.8 percent on Monday amid demand sparked by a rising Canadian dollar and expectations this will result in more mill curtailments, traders said.
A rising Canadian dollar makes Canadian lumber exports less favorable to the United States. And with lumber prices in the U.S. currently at historically low levels due to the housing crash, it will be even harder for those mills to make money.
'Mills are going to have to make a decision irregardless of hedging their currency in Canada to curtail more production,' said Ashley Boeckholt, lumber analyst with Bloch Lumber. 'A lot of mills say they hedge their currency and they are OK, but I would say that if the Canadian dollar continues along the path it is on and (cash) prices stay where they are at there is going to be another round of curtailments.'
'And you will probably see a lot of those cuts when you go into Thanksgiving and the holiday season when these mills take some downtime,' he said.
* November lumber closed up $7.80 at $171.40 per thousand board feet and January was up $4.50 at $187.50 per tbf.
* Futures set contract lows last week following the weak tone to cash lumber markets and any further mill curtailments would likely result in higher cash prices even with housing remaining slow.
* Random Lengths on Friday quoted cash spruce at $177 per tbf, down $3 from Wednesday and down $9 from a week ago.
* 'Both production and demand hovered at anemic levels,' Random Lengths said. 'Traders' attitudes grew more bearish as competition for the available business pulled prices lower.'
* 'Mills with little to sell stuck to their lists or priced defensively. Others lowered quotes or solicited counters to keep production moved off,' they said.
* 'Frustrated by unsuccessful earlier attempts to make something happen, office wholesalers steered clear of speculative positions on either side of the market,' the reporting agency added.
(Reporting by Jerry Bieszk; Editing by Lisa Shumaker)
((jerry.bieszk@thomsonreuters.com; 312-408-8725; Reuters Messaging: jerry.bieszk.reuters.com@reuters.net)) . Keywords: MARKETS LUMBER CME (For help: Click 'Contact Us' in your desk top, click here 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) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
A rising Canadian dollar makes Canadian lumber exports less favorable to the United States. And with lumber prices in the U.S. currently at historically low levels due to the housing crash, it will be even harder for those mills to make money.
'Mills are going to have to make a decision irregardless of hedging their currency in Canada to curtail more production,' said Ashley Boeckholt, lumber analyst with Bloch Lumber. 'A lot of mills say they hedge their currency and they are OK, but I would say that if the Canadian dollar continues along the path it is on and (cash) prices stay where they are at there is going to be another round of curtailments.'
'And you will probably see a lot of those cuts when you go into Thanksgiving and the holiday season when these mills take some downtime,' he said.
* November lumber closed up $7.80 at $171.40 per thousand board feet and January was up $4.50 at $187.50 per tbf.
* Futures set contract lows last week following the weak tone to cash lumber markets and any further mill curtailments would likely result in higher cash prices even with housing remaining slow.
* Random Lengths on Friday quoted cash spruce at $177 per tbf, down $3 from Wednesday and down $9 from a week ago.
* 'Both production and demand hovered at anemic levels,' Random Lengths said. 'Traders' attitudes grew more bearish as competition for the available business pulled prices lower.'
* 'Mills with little to sell stuck to their lists or priced defensively. Others lowered quotes or solicited counters to keep production moved off,' they said.
* 'Frustrated by unsuccessful earlier attempts to make something happen, office wholesalers steered clear of speculative positions on either side of the market,' the reporting agency added.
(Reporting by Jerry Bieszk; Editing by Lisa Shumaker)
((jerry.bieszk@thomsonreuters.com; 312-408-8725; Reuters Messaging: jerry.bieszk.reuters.com@reuters.net)) . Keywords: MARKETS LUMBER CME (For help: Click 'Contact Us' in your desk top, click here 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) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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