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Lumber’s boom-bust cycle sets producers up for year-end rally

Bloomberg
Bloomberg8/26/2021 12:26 PM GMT+08  • 3 min read
Lumber’s boom-bust cycle sets producers up for year-end rally
Over the past 20 years, lumber prices have tended to slump in September before rallying into the new year
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Plunging lumber prices may have sent shares of producers tumbling in recent weeks, but analysts and traders say that if history is any guide, stocks are set for a rebound as the homebuilding season picks up into year-end.

Over the past 20 years, lumber prices and shares of companies from West Fraser Timber Co and Canfor Corp to Louisiana-Pacific Corp have tended to slump in September before rallying into the new year, according to a Bloomberg analysis of seasonality patterns. RBC Capital Markets analyst Paul Quinn says don’t expect this go-around to be any different.

“We see a positive setup for the traditional seasonal trade, where shares will typically bottom around mid-to-late October before rallying in anticipation of the upcoming building season,” Quinn wrote in a note to clients last week.

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