Lumber coming out of the darkness

[maxwellreid]

Lumber looks a painful market, all technical indicators are a sell but I went long on Thursday and the market has since gone limit up 2 days in a row. Fundementals are of course against this market if you look at the residential building fall off. However, as sawmills close down and infrastructure spending gears up, lumber may have found a bottom. Of course it could also be a squeeze on the shorts.

Max

 

[wmbelg]

Yeah, but we can't trade it at Interactivebrokers.

Now that it is on globex we can't trade it.

Damn!

 

[maxwellreid]

I use IB, as well as CFD providers. ie CMC when the contract is too large (for me) or not available. Lumber has since had another limit up day. Eased off today. Lumber is often seen as a early indicator for the property market. If so, then, maybe this is the start of a turn around, although it would have to be a slow painful one.

Max

 

[wmbelg]

I use IB, as well as CFD providers. ie CMC when the contract is too large (for me) or not available. Lumber has since had another limit up day. Eased off today. Lumber is often seen as a early indicator for the property market. If so, then, maybe this is the start of a turn around, although it would have to be a slow painful one.

Max

How did you trade the lumber, with IB?

I can't trade it with IB.

Vote my poll http://www.interactivebrokers.com/en/general/poll/poll.php?sid=4279

to have the lumber in place with IB.

Spreads on Globex are very good i think.

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[maxwellreid]

I trade lumber thru CMC, because it is not available thru IB. In my general trading I use both IB and CMC. I was not clear in my post.

Max

 

[wmbelg]

I don't find lumber in their product list.

 

[maxwellreid]

CMC Markets Australia - Commodity CFDs - Australia's No.1 CFD provider

I trade lumber thru CMC in Australia. I have to admit I struggle with how far the UK is behind Oz in what and how they do things. Placing limit orders on stocks in the UK are like watching paint dry

Max

 

[maxwellreid]

Lumber was probably the commodity that turned down first in this bear market - out of the commodities. If you follow FIFO then a bottom for lumber (if it has been reached) may be an important indicator for a general market turn around.

Max

 

[N Rothschild]

i like your thinking but its going to take more than building new houses to turn this mess around

 

[maxwellreid]

I am looking at the bottom for lumber being made and the possibility of it being an indicator to a general market bottom. I agree building more house will not drag us out of this quagmire.

Max

 

[maxwellreid]

There's just something about lumber.... "According to CRSP, only one industry had positive returns from 1930 through 1932: logging. The two stocks in that tiny sector, Diamond Match and Mengel Co., whittled out a cumulative gain of 40% for the three-year period. Diamond turned timber into matchsticks; Mengel made trees into packing materials, primarily for daily necessities like tobacco and soap."

1930s Lessons: Stocks for After a Crash - WSJ.com

Max

 

[maxwellreid]

I think traders in this market for lumber are exhausted. That is, it has been hit by so much bad news:
"Earlier Wednesday, Commerce reported that seasonally adjusted housing starts in January were down 14.5% from December to 466,000 units, far worse than the 4.9% decline economists had predicted. Adjusted building permits were down 4.8% to 521,000, according to Commerce". The bad news barely dented the lumber market. imho, this is a time for "fresh eyes". Do Your Own Research

Max

 

[maxwellreid]

Lumber, may turn out the star of the softs. A few limit up days, rumors of more mill cut backs and houses are still being built. Lumber needs only a small catalyst, given the general malaise in housing. The stimulus will need lumber as well. Some profit has gone in the roll overs, but all in all..

Max

 

[maxwellreid]

lumber has been a commodity star. $140 to $318. Whether this market bull market continues, lumber did indeed call the turn. Worth keeping an eye on as it may signal any down turn. When this "softs" thread gets excited it will be time to exit

Max

 

[maxwellreid]

Lumber Prices Are Signaling A Growing Economy - Business Insider

Lumber, calling the market.

 

[wackypete2]

Got wood?

Peter

 

[Aristix]

I am not interested in simple lumber price but in future term structure.
I see now it is in contango and also last 2 years it was in contango, even if it has high prices. Instead, 3-4 years ago it was in backwardation also strong.
It is strange, it would be a regular commodity with low volumes, so it would be or always incontango or always in backwardation. I need a commodity with regular future term structure, bacwd or contango is the same, but it must be constant.
Can anyone explain it? Peraphs did it change anything in the trade mechanism of lumber, in storage or insurance or transport cost? Can we think it will remain in contango in next years?

 

[Penny Picks]

Lumber?

Lumber is a thin market. I always avoid thin markets.