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Timber futures once soared historically high prices this year, and they are also one of the commodities that rose the most this year. However, as the market turned oversupply and prices fell, the market changed from red to black on Monday (12th) this year.

CME Group's (CME) timber futures fell 5.6% on Monday to at least US$712.90 per thousand board feet. The gains this year have officially returned to zero, turning into a decline of 0.6%. Timber futures rose to a record high of $1,733.50 on May 7, more than four times the market price at the beginning of the year.

Timber futures surged earlier this year following the restart of the US economy and became the focus of the US inflation and monetary policy debate. At that time, investors worried that the surge in this important construction material would push up costs and impact the US economic recovery.

However, the lumber futures market has been hot for several months. After hitting a historical high, it quickly extinguished, becoming another raw material with violent fluctuations this year after iron ore. Fed Chairman Bauer also cited timber futures prices as an example last month, explaining that the pressure of rising prices is a transitional phenomenon. The reason is that as the economy continues to restart and stimulus measures fade, the bottleneck in the supply chain will be alleviated. .

Greg Kuta, chief executive of Westline Capital Strategies, which specializes in timber trading strategies, said that timber inventory levels have risen, and at the same time, US consumers' timber retail demand for home repairs has "substantially reduced," causing timber futures prices to fall.

Despite the recent forest fires in western Canada, an important timber producing area, there are more than 300 wildfires in British Columbia, and rail transportation has been greatly disrupted, which does not seem to affect the timber market.

Since the 1990s, wood prices have mostly ranged from US$200 to US$400 per thousand board feet. Only in 2018 it rose above US$600. Therefore, Kuta believes that the recent "large-scale free fall correction" is just a re-reflect of the expected psychology of wood supply and demand to the end of the year. He predicted that the timber price before the end of the year will fluctuate between 550 and 1,200 US dollars, and if it rises above 1,000 US dollars, it will face selling pressure.

Royal Bank of Canada Capital Markets analyst Paul Quinn said that timber prices usually fall during the summer months, with a slight increase in September, and then fall again in November.