by Web Editor | Jan 22, 2016 | News
The U.S. Census Bureau & the Department of Housing & Urban Development released its December and total 2015 statistics on new residential starts in the U.S. There were no real surprises with the data, but predicting U.S. housing starts has been virtually impossible for analysts and economists.
WOOD MARKETS has conducted its own U.S. housing forecasts since 2007 when about that time, consensus forecasts became wildly inaccurate. Since then, WOOD MARKETS has repeatedly highlighted that a structural change has been occurring in the U.S. housing market and the use of traditional economic models will not work until much later in the cycle. As a result, WOOD MARKETS own housing forecasts have been decidedly more conservative as compared to all other economists’ forecasts. Since 2007, our housing and supply/demand forecasts have been much closer to the actual results as compared to the many dozens of professional economists and modelers.
The key take-away message is this: The Consensus forecasts continue to be too high – with some being way off the charts. For those that use housing forecasts in their business plans, using the consensus forecasts in 2014 of 770,000 single family housing starts would have resulted in forecasts of almost 2 billion board feet of extra lumber demand. This type of forecasted demand increase would have suggested a much tighter supply and demand balance, where higher lumber price forecasts could be another one of the wrong predictions.
And WOOD MARKETS’ U.S. housing forecast for 2016 (in WOOD MARKETS 2016) is once again lower than the Consensus forecast – no surprise here. And our consultants have a decidedly conservative tone to North America and Chinese demand as well as prices for 2016 – all predicted before any signs of the current global economic volatility started.
From International Wood Markets: https://www.woodmarkets.com/forecasters-struggle-for-accuracy-as-u-s-housing-starts-grew-steadily-in-2015/
by Web Editor | Dec 21, 2015 | News
New WOOD MARKETS five-year forecast calls for continued volatility as North American and global lumber markets continue to recover and grow.
In WOOD MARKETS’ new five-year forecast, the short-term outlook is that North American and global economies, as well as softwood lumber and panel markets, are all forecast to improve, but at a much slower pace than has been expected. What has also short-circuited the prospects of stronger demand is a slowdown in China and Japan, impacting export markets. And the new wildcard that caused U.S. dollar prices to plunge in 2015, especially in softwood lumber, was the rapid currency devaluations of almost all major lumber producers as compared to the U.S. dollar. All of these factors have changed the WOOD MARKETS outlook to one that expects more lacklustre demand and corresponding price growth through 2018. After that, it starts to look very good.
These details and further analysis of commodity lumber and panels was released last week in the report, WOOD MARKETS 2016 – The Solid Wood Products Outlook: 2016 to 2020 by International WOOD MARKETS Group, Vancouver BC.
The supply-side dynamics feature eroding sustainable timber harvests in key provinces in Canada, resulting in dramatically lower lumber production than in the previous decade. Canada’s total lumber output will start to flatten out by 2018 with no further increases expected – just as U.S. and global demand are expected to gain momentum.
On the U.S. side, the U.S. West Coast region continues to watch log export prices in China and Japan, as many domestic log prices are correlated with export prices – this can quickly tighten the wood supply for sawmills and plywood mills as export prices rise. The U.S. South is forecast to be the only region where any significant lumber and panel production will occur, mainly due its ample, under-utilized timberland base of southern yellow pine. As lumber and panel demand increases, it is forecast that the current depressed log prices will start to move higher to feed incremental wood consumption of the expected additional panel and sawmill production.
From Wood Markets: https://www.woodmarkets.com/global-malaise-in-demand-coupled-with-rising-production-stalls-price-movement-in-north-america/
