Monday, August 1, 2011

Today's Major Market Move - Lumber Futures Down Over 10% in the Past Week

Commodities in general were down last week as the "Risk Off" sentiment dominated the market mind set. All of the uncertainty surrounding the debt drama resulted in many investors searching for safety although how many people really,truly believed that a deal was not going to get worked out in time? The worst performer in the commodity sector (of the 29 commodity futures that we track) over the last 5 trading days was Lumber, dropping 10.6%.

Click on the image for a larger view.
Click here to go to the table with the most recent data.

For the year, lumber is now quickly approaching its previous low of 219. Only one commodity has performed worse this year: cotton. Here's a chart of the top 5 commodities in terms of price declines since January.

Click on the image for a larger view.
Click here to go to the chart with the most recent data.

It would be natural to try to draw a correlation between lumber prices and homebuilder activity. In my opinion, the best homebuilding metric to use would be housing starts, however the best chart I could find is the one below from Calculated Risk. The data is graphed over a much longer time frame so it can't really be used for comparison.

Click on the image for a larger view.
Here is a link to the source chart.

We are working on collecting various homebuilding metrics as well as the homebuilder ETF, XHB. We hope to have this set up over the next couple weeks and once that happens we'll be able to provide a comparison with lumber prices in a single chart.

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