Markets

Lumber May Fall 25% After Leading Commodities in 2012: Report

Lumber futures may tumble as much as 25% from a seven-year high as output increases in Canada, the world's biggest exporter, according to Forest Economic Advisors LLC, Bloomberg reports.

The price may touch $300 per 1,000 board feet in 2013, Paul F. Jannke, a principal at the Westford, Massachusetts-based consulting company, said in a telephone interview on Dec. 27. In mid-October, he correctly forecast the rally.

As the U.S. housing market rebounded this year, lumber prices through Dec. 28 soared 47%, heading for the biggest annual gain since 1993. That topped the 24 raw materials in the Standard & Poor's GSCI Spot Index, led by a 19% rally in wheat futures in Chicago.

U.S. building permits, a proxy for future construction, rose to an annual rate of 900,000 in November, the highest in four years, government data shows. That helped boost the shares of lumber producers including Weyerhaeuser Co. and Plum Creek Timber Co.

Lumber was the top commodity pick for 2013 at Scotiabank Group because rising demand in the U.S. and China will strain tight supplies. "Substantial" mill closures across North America since 2006 set the stage for a multiple-year recovery, the Toronto-based bank said in a statement on Dec. 20.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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