Lumber Prices

[HereOnThePrimalEdge]

There is a new trading method that will affect lumber prices soon:

Lumber prices have been on a wild ride in the last few years, but they could soon get less volatile, even with trading volume set to soar.

Along with other top commodities, lumber prices have seen big swings since the pandemic. They collapsed below $300 per thousand board feet in early 2020, jumped to $1,000 later that year, crashed again, soared past $1,700 in May 2021, tumbled back down, rebounded to nearly $1,500 in March of this year, plunged yet again, and are now below $600 as the housing market slows down.


https://markets.businessinsider.com/news...ket-2022-7

[microage97]

Looks like they will be going way lower as home builders have stopped / slowed building nationally.

[dobanion]

What are the prices for dimensional lumber doing at the local big box stores? How long behind the official market prices are what's on the shelves?

[Space Karen]

The time is ripe to stockpile aluminum cans as a commodities hedge against inflation.

[HereOnThePrimalEdge]

aluminum cans as a commodities hedge 

Price per pound of aluminum?
Price per pound for shipping to a processing plant?

[dobanion]

Traditional commodity based inflation hedges didn't work this time around. See gold and silver.

Now if you had bought up a bunch of oil futures, different story.

[Space Karen]

Traditional commodity based inflation hedges didn't work this time around. See gold and silver.

Now if you had bought up a bunch of oil futures, different story.

Central banks own and control a lion's share of gold and silver reserves. Making it easy for them to set prices.

Aluminum prices are also controlled on the supply chain and distribution end. Coca cola and pepsi complained about it for years.

The price of a bushel of wheat, a pound of aluminum or a gram of gold are all expected to retain value better than unbacked currencies lacking intrinsic value.

Prices for commodities should have parity with oil. Increased cost of shipping trickles down everywhere.

[Ccat]

The price of wheat is determined by the market: supply vs. demand. It’s the one of the most competitively priced things on earth.

MS Ag Econ, 1975, UC Davis (rated as the best Ag Econ dept in the world) and 43 years of hands-on, “money where your mouth is” farming experience.

You don’t want to be a wheat farmer: brutal economics.

Ccat

[Space Karen]

The price of wheat is determined by the market:  supply vs. demand.  It’s the one of the most competitively priced things on earth.

MS Ag Econ, 1975, UC Davis (rated as the best Ag Econ dept in the world) and 43 years of hands-on, “money where your mouth is” farming experience.

You don’t want to be a wheat farmer:  brutal economics.

Ccat

Wheat is in high demand during food shortages and famine.

If prepared and stored correctly, it can remain viable for 30 years.

It is a great time to be a wheat farmer.

You might have noticed russia invade ukraine to seize control of their wheat supply.

Even Putin is getting in on the commodities action. Although I doubt many noticed.

[Ccat]

The price of wheat is determined by the market:  supply vs. demand.  It’s the one of the most competitively priced things on earth.

MS Ag Econ, 1975, UC Davis (rated as the best Ag Econ dept in the world) and 43 years of hands-on, “money where your mouth is” farming experience.

You don’t want to be a wheat farmer:  brutal economics.

Ccat

Wheat is in high demand during food shortages and famine.

If prepared and stored correctly, it can remain viable for 30 years.

It is a great time to be a wheat farmer.

You might have noticed russia invade ukraine to seize control of their wheat supply.

Even Putin is getting in on the commodities action. Although I doubt many noticed.

---

Nonsense.

“Wheat is in high demand during food shortages and famine.”   Short food supply implies higher prices not higher demand. Demand for commodities is relatively inelastic.  Higher prices will generate increased supply but with a time lag.  Yada, yada, yada...Learn about it.

“It’s a great time”...  For about five minutes.  Then prices will get back to normal which will be barely above or just below the actual cost of production due to near perfect competition, worldwide.  What you are referring to is “windfalls”.  You can’t do probabilities (and thus plan) on windfalls. 

“Commodities”....  you are speaking about *speculating* on a crop, not growing a crop at a profit.  The added expense of speculation decreases profit.

“Viable for 30” years, etc”:  it costs money (which increases expenses and, ceturus paribus, decreases profits)  to store/maintain a crop in sale-able condition.  All seed germ degrades over time.  You are talking theoretical germ viability, not crop profitability.

There’s no “gravy train” for commodity farmers over the long run.  It’s a hard scrabble life.  Once in awhile you have a lucky year and finally make a little and *think* like you are going to finally get rich.   But that is balanced out by all the marginal years or outright losses.

Making a profit by growing a “commodity” will be short lived because commodities are nearly perfectly competitive over the long run. 

perfect competition eliminates profits.

You need to learn basic economics.

Ccat