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Why Do Lumber Prices Rise and Fall?

by Valley Box Company on Mon, Feb 25, 2013

America's business owners are well aware that fluctuations in the commodity market can cause a pinch to the pocket.  As the economy continues to flounder, prices of raw materials remain unpredictable, causing a headache for the country's businesses that rely on these numbers to maintain projected cost of materials over a period of time.

wood crate material

The lumber industry is no stranger to the ever changing climate of raw commodities.  Traded on the regulated Chicago Mercantile Exchange, lumber contracts are released six times annually and are erratic in nature due to everything from external market forces to macroeconomic conditions.  This form of nonnegotiable, standardized contracts leave lumber suppliers tasked at keeping overhead costs down while offering reasonable pricing.

commodities market

Valley Box directly experiences the impact of shifting market costs through the varying prices passed down from lumber mills.  To better understand why these variants occur one must closely examine the moving pieces that affect the cost of lumber.

  • Housing Market spikes and dips directly correlate to lumber prices.  America’s recent housing rebound has created a greater demand for wood products.
  • Interest Rates can deter or entice consumers to purchase new homes, influencing construction growth and the need for lumber.
  • Chinese Overcapacity helps to dictate price because a rise in population forces the developing country to stock up on their lumber inventory. 
  • Natural Disasters like Hurricane Sandy can help timber stocks while the devastated region rebuilds.
  • Environmental Legislation written to protect public land from deforestation by withdrawing timber production drives lumber prices upward.

As a lead packaging manufacturer, Valley Box works hard for our loyal customers to predict the cost swings of this volatile market set forth by these contracts by absorbing price spikes and working leaner and more efficiently.  

We can guarantee that our prices are always competitive and that our high quality, environmentally safe and recyclable wood crate solutions will continue to satisfy the needs of our customers.    

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This post was written by Valley Box Company

Valley Box demonstrates what is possible beyond just the typical wooden box. This specialty packaging manufacturer works with a wide variety of materials from wood to plastic, corrugate, metals and more. Discover how to take specialty packaging to the next level.

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