CHICAGO, May 24 (Reuters) - U.S. lumber futures fell nearly 2 percent on Friday, capping their deepest streak of losses in 1-1/2 years as a resurgence in the domestic housing market was overshadowed by plunging wood exports from the U.S. West Coast, experts said.
Benchmark prices for the building material dipped below the threshold of $300 per thousand board feet for the first time since October at the Chicago Mercantile Exchange and have declined more than 25 percent since notching an eight-year high of $400.80 per tbf in February.
“Lumber didn’t belong so high originally,” said Robin Cross, chief operating officer at brokerage Paul Court Company in Chicago. “We hyperextended to the upside and now production is outweighing demand.”
Log exports during the first quarter of the year fell 33 percent to 242 million board feet from the U.S. West Coast’s top export markets, according to Xiaoping Zhou, a research economist at the U.S. Forest Service in Portland, Oregon.
“(Importers) are searching for supply from other regions because prices are up,” Zhou said.
Overall U.S. lumber exports were up 11 percent during the first quarter of 2013 but fewer sales from the West Coast, the most direct shipping route to important Asian destinations such as China, weighed on lumber futures.
Stock prices for domestic homebuilders and building materials companies are on the rise due to growing optimism about new-home construction and house buying. Luxury homebuilder Toll Brothers Inc reported stronger-than-expected earnings this week and the highest quarterly orders in seven years.
However, gains in lumber prices earlier this year led some lumber mills to ramp up production even as demand for wood slowed amid rallying futures.
CME lumber for July delivery on Friday settled $5.80 lower at $297.40 per tbf, the lowest price since Oct. 24.
“Demand got tapered with the price. Until we see an uptick in demand, the market is going sideways to lower,” Cross said from the trading floor in Chicago.