By Jerry Bieszk
CHICAGO, May 7 (Reuters) - Lumber futures at the Chicago Mercantile Exchange fell sharply again on Friday with active July setting a nine-week low amid further fund liquidation and pressure from weak cash markets.
Friday's loss followed Thursday's limit drop of $10 per thousand board feet, and both were attributed to weak cash lumber markets with more imports expected from Canada.
The actively traded July contract was down $8.50 at $277, having fallen $60 since its recent high on April 21.
'Supply-driven markets move up quickly and kind of roll over and don't look back after they are done,' said Ashley Boeckholt, lumber analyst with Bloch lumber Acquisition LLC. 'We are trying to figure out if it's a down side of a supply-driven market or a little add on to sell off in stocks yesterday.'
Boeckholt cited the lower cash lumber market and expectations of increased shipments from Canada.
Beginning in June, a lumber composite price holding above $355 would reduce export taxes on Canadian lumber.
'The real fear is there will be a lot of lumber coming across in June with not as much business' to offset the supply, he said.
Lumber reporting agency Random Lengths on Friday put its Framing Lumber Composite price at $358, which ensures that Canadian producers will have no export tax liability during the month of June.
'But how the Canadian industry reacts to that reality with regard to shipments and production was a source of uncertainty,' Random Lengths said.
At the CME, May lumber closed down $2.40 at $272.60 per tbf. May traded near its nine-week low set on Thursday and July set a nine-week low.
Funds have been liquidating long positions and on Friday there appeared to be some additional fund selling ahead of the weekend. Open interest has declined.
'They have dropped open interest pretty good over the last week. I think a lot of it is funds coming out of the market,' Boeckholt added.
Random Lengths quoted the average cash spruce price at $305 per tbf on Friday, down $12 from Wednesday and down $15 from a week ago.
'While many traders viewed the softening in prices as a normal digestive phase following an impressive run, larger economic issues, including Thursday's huge stock market swing and the European debt crisis, also left traders jittery,' the reporting agency added in its Friday report.
(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 2010. 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.
CHICAGO, May 7 (Reuters) - Lumber futures at the Chicago Mercantile Exchange fell sharply again on Friday with active July setting a nine-week low amid further fund liquidation and pressure from weak cash markets.
Friday's loss followed Thursday's limit drop of $10 per thousand board feet, and both were attributed to weak cash lumber markets with more imports expected from Canada.
The actively traded July contract was down $8.50 at $277, having fallen $60 since its recent high on April 21.
'Supply-driven markets move up quickly and kind of roll over and don't look back after they are done,' said Ashley Boeckholt, lumber analyst with Bloch lumber Acquisition LLC. 'We are trying to figure out if it's a down side of a supply-driven market or a little add on to sell off in stocks yesterday.'
Boeckholt cited the lower cash lumber market and expectations of increased shipments from Canada.
Beginning in June, a lumber composite price holding above $355 would reduce export taxes on Canadian lumber.
'The real fear is there will be a lot of lumber coming across in June with not as much business' to offset the supply, he said.
Lumber reporting agency Random Lengths on Friday put its Framing Lumber Composite price at $358, which ensures that Canadian producers will have no export tax liability during the month of June.
'But how the Canadian industry reacts to that reality with regard to shipments and production was a source of uncertainty,' Random Lengths said.
At the CME, May lumber closed down $2.40 at $272.60 per tbf. May traded near its nine-week low set on Thursday and July set a nine-week low.
Funds have been liquidating long positions and on Friday there appeared to be some additional fund selling ahead of the weekend. Open interest has declined.
'They have dropped open interest pretty good over the last week. I think a lot of it is funds coming out of the market,' Boeckholt added.
Random Lengths quoted the average cash spruce price at $305 per tbf on Friday, down $12 from Wednesday and down $15 from a week ago.
'While many traders viewed the softening in prices as a normal digestive phase following an impressive run, larger economic issues, including Thursday's huge stock market swing and the European debt crisis, also left traders jittery,' the reporting agency added in its Friday report.
(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 2010. 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.