To understand what is happening in the near term lumber market, here are a few scenarios:

Framing packages for home builders were agreed to 30-45 days ago. Lumber yards didn’t cover that commitment anticipating prices would dip soon. No dip, deadline approaching, gotta cover.

Home builders have delayed issuing POs to lumber yards thinking prices we dip. They delayed q4 projects to q1. No dip came, deadlines approaching, gotta start the project no matter what.

Same dynamic as before.

Lumber yards, having been burned so much the last 6 months, covered jobs more aggressively but demand outpaced projections and they are under bought. Scrambling to cover new business that wasn’t budgeted for.

Lastly, folks bought lumber at insanely high prices, hedged it because the downside is so large. Now they are selling off their wood and don’t need to hedge so the squeeze is on in futures. (Me!)