Eye On Industry – Episode 2: Lumber

Today, we’re going to be talking about wood, or to be more accurate lumber.

Lumber has been in the news a lot these days – mostly because of its price – which despite a recent selloff, has outperformed gold as commodity over the past five months. 

As we’ll soon learn, lumber is a pretty critical component of the housing market – which even in the midst of record unemployment – is booming.

According to the US Census Bureau — July saw a nearly 23% jump in U.S. home construction from the prior year — at a seasonally-adjusted annual rate of 1.496 million.

At a glance, it would seem that the exodus out of our big cities, — NY and SF is real and that this is a demand driven phenomenon. But as we’ll soon learn, there is a supply side to this market that has its own logic.

We’ve asked Ashley Boeckholt from MaterialsXchange to help us make sense of the lumber market. Ashley has more or less spent his life in the lumber market. He started his career as an operator at his family’s retail yard then transitioned to a national wholesale distributor, then to Koch Pulp and Paper Trading where he managed lumber risk for institutional clients. More recently he helped form a startup called MaterialsXchange, a digital marketplace for forest product including lumber and panels.