Lumber Prices and Lumber Futures

Lumber prices did drop like a rock in Fall 2021 (which JohnH seems to deny); then back up. Then back down.

Figure 1: PPI for lumber (black, left scale), and lumber front month futures (sky blue), and futures as of 1/3/2023 (blue +). NBER defined peak-to-trough recession dates. Source: BLS via FRED,,, and NBER.

From May to September 2021, the PPI for lumber dropped 50%. From March to November 2022, the PPI for lumber has droppped 36%, with more drop in store according to futures (although probably a smaller amount than implied by unit elasticity — something more like 14% than the 22% implied by futures for January expiration.

Note that futures prices are in contango (later in future higher than current), as they usually are.

87 thoughts on “Lumber Prices and Lumber Futures

  1. pgl

    I have no idea why Jonny got all emotional again over lumber prices but then I did not how his BFF Princeton Steve fell all over himself with respect to oil prices back in 2021. My bad I guess.

    No Jonny is denying he ever claimed lumber prices would not come back down but to refresh his failing memory – he claimed this was some sort of monopoly power at the retail level (Home Depot and Lowe’s). Actually if one looks at the financials for the publicly traded companies that either are pure play sawmills or timberland REITS with significant sawmill sectors (profits for the timberland are not taxable for profits for the sawmill sector are taxable which is a serious transfer pricing issue) one would see a huge jump in the profits for the sawmill when lumber prices rose faster than timber prices.

    But it seems Jonny never got around to these important details. I might note that one does not have to look at that many 10-K filings given all the mergers in this sector (which maybe an important anti-trust issue). But Jonny never mentioned that either. Of course, we have askes Jonny to review the actual 10-K filings for companies he talks about. But he never does. A little hint. is a great source of information.

      1. pgl

        Gee Brucie sees a discussion over market structure and the possibility of market power and all he’s got is that there was a shift in the demand curve? Oh well Brucie limits his economic reading to the BS from Tyler Cowen so what should we expect.

        Hey Brucie – adults are talking so your preK sand box whining is not useful.

          1. Bruce Hall

            BTW, where was Tyler Cowen mentioned in the three links I provided that tell the story about why prices were high under Trump (not oligarchs) and getting lower under Biden. Apparently, pgl doesn’t like a vibrant economy like 2018 with high demand for commodities, but prefers a faltering economy with demand falling off. Good to know.

          2. pgl

            An Economist Gets Lunch: New Rules for Everyday Foodies (Dutton: 2012)

            This cannot be a serious work of economics. Which is why only Dutton would publish it I guess. Wait – all of Tyler’s writings seem to be ala Dutton. Gee Brucie – you actually think this is a resume? Now let’s try:

            Journal of Labor Research
            Journal of Money Credit and Banking
            Journal of International Money and Finance
            Economic Letters

            Just to name a few of my academic publications before I went into the consulting world where I have dozens of publications. Now Brucie – how many publications do you have. I’m sure they all compete with those Dr. Seuss works.

          3. Bruce Hall

            Hey, ProLiberalGrowth, I don’t need to have an agreement with you or JohnH. I make my own comments supported by links and you make your ad hominem comments supported by nothing. So when the buggering off is in question….

      2. pgl

        “In order to understand lumber prices today, we have to look back to 1986, when the Reagan administration launched its Conservation Reserve Program. At the time, the farming industry was in crisis and agricultural commodities had plunged. In order to help out the farmers, the Federal Government began a program that offered farmers an incentive to plant trees and grasses on their depleted land, instead of their normal crops. With the Conservation Reserve Program, farmers were promised $30 to $50 for each tree-planted acre annually. As you might imagine, many farmers took the offer. They saw it as a great way to invest. Not only would they get paid to plant the trees, but once the trees reached maturity they’d also make money selling the timber. It all sounded like a great deal, but the problem was that so many landowners took the deal. According to the Wall Street Journal, “By 1994, more than 2.2 million acres of farmland in the South had been converted to pine plantation, much of it in Mississippi, Alabama and Georgia. Other federal forestation programs added about 2.5 million acres more.”

        So Brucie realizes that it was St. Reagan the Socialist that led to low timber prices. Poor Brucie is going to be banned from the young Republican club for this.

        BTW Brucie – everything noted in that link was mentioned by the WSJ podcast. Yea old farmer Joe may have a hick accent but he is far ahead of little Brucie boy.

        1. Bruce Hall

          LOL! That’s pretty weak, even from you, pgl. Now you think socialism creates greater supplies of commodities. Please cite some examples. Oh, yeah, you can’t.

          Perhaps, if you studied history at all, you’d know that Reagan rejected his union and Democratic Party affiliation. Of course, the Democrats scrambled to rationalize that he did it for political expediency, not because he saw the bankrupt policies of the left. So, I’ll expect that you’ll come back with the same sort of pablum response.

          1. Bruce Hall

            Of course, government policies can distort the marketplace. For example, by directly incentivizing EVs, the government can reduce demand for superior ICE vehicles that are more durable, less expensive, and vastly more practical based on the fantasy that changes in weather are cause by ICE vehicles. How about banning natural gas for high cost electricity when the grid is already being strained? Oh, that sounds like a brilliant government policy. Sure, the government can take good cropland and turn it fallow based on the government’s determination of what the market should demand and pay. From this “moderately left” news source:

            But, of course, there is a cost to this “socialism”. The money to pay for these market distortions comes either from higher taxes or greater debt… and let’s not forget “transitory” inflation. Soviet style is always better, eh pgl?

          2. pgl

            I guess you do not read your own links. Or do you not understand that government subsidies increase supply. Damn Bruce – I was trying to say you are not as dumb as JohnH. But then I realized you are dumber.

          3. pgl

            Bruce Hall
            January 5, 2023 at 9:55 am

            The topic is lumber but Brucie boy starts talking about electric vehicles. Come on Brucie – lay off the whiskey.

          4. pgl

            Feeding us a lot of totally off topic blah, blah, blah is your idea of engaging in a discussion of lumber prices. Let me take just one part of your totally off topic BS. Your little link talks about letting farmland be fallow for a season. But Brucie – the discussion was about having land be used to grow trees – not lay fallow.

            Come on Brucie – if you do not have an effing clue what the discussion is about – then just butt out. After all – dealing with JohnH’s utter stupidity is one thing but now I have to deal with your totally off topic BS too?

          5. pgl

            Poor little Brucie got all emotional when I suggested St. Reagan might be labeled a socialist for doing:

            ‘there is a cost to this “socialism”. The money to pay for these market distortions comes either from higher taxes or greater debt’

            Of course we know the choice St. Reagan took – massive amounts of government debt. Never mind Brucie did not get that the conversation was about the market structure of the lumber market. Every attempt to ding Biden is like a knife in the back to St. Reagan.

          6. Bruce Hall

            Aw, ProLib want to stick to lumber even though he wanders randomly through various posts.

            I guess you do not read your own links. Or do you not understand that government subsidies increase supply.

            Okay, so if the government pours enough taxpayers’ money into a market, it can distort that market. Yippee. The government poured money into lumber production through incentives and more lumber was produced. The question which is not answered is whether, in the light of increased demand for house, growers would have dedicated more land to production to meet that demand without a massive waste of taxpayers’ money. Of course the growers were glad to take the money. Free money! Yea!

            And, of course, there is the question of what was not produced as a result of the land being forested. Did those products have to be imported? Or were those commodity supplies less than the market demanded and cause price increases? What were the unintended consequences of the government deciding what should be grown? Yeah, the government decided; hence, the incentives.

            Now the government does the same thing with EVs and the market is getting distorted, but maybe not the way the government intended. Keep those incentives and what happens?
            Hey, why not? Free money.
            Strange that customers are still demanding gasoline powered vehicles considering there are no incentives and the anti-fossil fuel efforts of the government have discouraged new investment.

            Yeah, yeah, save the planet. Meanwhile, make the well-connected rich.

  2. pgl

    “Lumber prices did drop like a rock in Fall 2021 … then back up. Then back down.”

    In a word, commodity prices are volatile. Which of course allows people willing to misrepresent the data more opportunities to spin.

    Now there is this rather odd if not dishonest tendency from the same people to accuse the rest of us of “moving the goal posts”. Of course goal posts are made with lumber after all. Now normally we put goals posts 10 years behind the goal line but JohnH thinks they should be put on the 30 yard line. So I guess the officials of all those Bowl Games I’ve been watching are guilty of moving the goal posts.

  3. pgl

    “then back up. Then back down.”

    Your graph’s labeling put me onto something slimy about JohnH’s latest rant that I missed. His whole “point” in that recent rant was that the decline in lumber prices during the summer of 2021 did not last forever. WHY? Because JohnH’s new master Putin invaded Ukraine. Excuse me but Putin’s pet poodle is not allowed to crow over the rise in lumber prices from the war crimes that Putin engaged in.

    1. JohnH

      Funny!!! Contrary to pgl’s stupid claim that lumber prices rose because of Putin’s invasion, they actually began to (finally!) fall.

      pgl needs a remedial chart reading course, available in any GED course.

      1. Macroduck

        Oh, Johnny, there’s so much you don’t understand. Let me offer you just one example relevant to the current topic.

        Market participants attempt to be forward-looking. In the case of lumber prices, they rose as it became clearer that Russia was preparing to invade Ukraine. That’s a very common pattern. It’s called “pricing in expectations”, an activity often discussed by market professionals, in the financial press and here at Econbrowser. It’s a shame you didn’t pick up on it, but your comment makes clear you did not. Don’t feel bad though – no one expects you to understand this stuff.

        1. JohnH

          Ducky, you have a great imagination.. In the Fall of 2021 nobody was talking about a Russian attack on Ukraine.

          1. pgl

            No one was talking about a Russian attack? Come on Jonny boy – your boss was telling his pet poodle all about the upcoming invasion which got you all excited.

            Now if the price rise was some monopoly play – then why does the price keep coming back down? Oh – you don’t know!

            Of course you are dumb enough to think it was Home Depot and not the sawmill companies I’ve been talking about. Yea – you are dumb.

          2. Menzie Chinn Post author

            JohnH: Huh? From Wikipedia (although you could find plenty elsewhere).

            On 11 October 2021, Dmitry Medvedev, Deputy Chairman of the Security Council of Russia, published an article in Kommersant, in which he argued that Ukraine was a “vassal” of the West and that, therefore, it was pointless for Russia to attempt to hold a dialogue with the Ukrainian authorities, whom he described as “weak”, “ignorant” and “unreliable”. Medvedev concluded that Russia should do nothing in regard to Ukraine and wait until a Ukrainian government comes to power that is genuinely interested in improving relations with Russia, adding “Russia knows how to wait. We are patient people.”[145] The Kremlin later specified that Medvedev’s article “runs in unison” with Russia’s view of the current Ukrainian government.[146]

            In November 2021, the Russian Defence Ministry described the deployment of the US warships to the Black Sea as a “threat to regional security and strategic stability.” The ministry said in a statement, “The real goal behind the US activities in the Black Sea region is exploring the theater of operations in case Kyiv attempts to settle the conflict in the southeast by force.”[147]

            Second Russian military buildup

            A map showing two alleged Russian plans published separately by Bild[148] and the Center for Strategic and International Studies (CSIS).[149]
            November 2021 – December 2021
            In early November 2021, reports of Russian military buildups prompted American officials to warn its European allies that Russia could be considering a potential invasion of Ukraine, while a number of experts and commentators believed that Putin was seeking a stronger hand for further negotiations with the West.[150][151] The Ukrainian military intelligence (HUR MOU) estimated that the figure had risen to 90,000 by 2 November, composing of forces from the 8th and 20th Guards, and the 4th and 6th Air and Air Defence Forces Army.[152]

            On 13 November 2021, Ukrainian President Volodymyr Zelenskyy announced that Russia had again amassed 100,000 troops near the Russo-Ukrainian border,[153] higher than an American assessment of approximately 70,000.[154] On the same day, in an interview on Russia-1, Putin denied any possibility of a Russian invasion of Ukraine, labelling the notions as “alarmist”, while simultaneously accusing NATO of undergoing unscheduled naval drills at the Black Sea.[155] 8 days later, the chief of the HUR MOU, Kyrylo Budanov commented that Russian troop deployment had approached 92,000.[156] Budanov accused Russia of conspiring several protests against COVID-19 vaccination in Kyiv to destabilize the country.[157]

            Pretty sure November is still “Fall”. So you still think nobody was talking invasion in Fall 2021?

          3. JohnH

            Based on a Google search, The war narrative only started in December, 2021. By that time much of the rise in lumber prices had already take place. Moreover articles linking Russia to higher lumber prices are virtually non-existent in Fall, 2021. Other factors with more explanatory power were at play, such a Biden’s impending tariff on Canadian lumber.

            If fear of war was driving lumber prices, how do you explain the dramatic rise in lumber prices vs. the modest rise in WTI during the comparable period. Wouldn’t investors in both markets have been spooked a lot by talk of impending war? When the invasion stared, lumber prices started declining but WTI spiked. How do you explain that?

            It is simply implausible to attribute much if any responsibility for the Fall, 2021 rise in lumber prices. We can agree, can’t we, that lumber prices did rise dramatically in Fall, 2021? Or is the NASDAQ spot price chart not reliable?

          4. Macroduck

            Autumn, 2021:

            10 November 2021, the United States reports an unusual movement of Russian troops near the borders of Ukraine.[1] By 28 November, Ukraine has a reported build-up of 92,000 Russian troops.
            7 December 2021, US President Joe Biden warns President of Russia, Vladimir Putin of “strong economic and other measures” if Russia attacks Ukraine.[1]
            17 December 2021, Putin proposes a prohibition on Ukraine joining NATO, which Ukraine rejects.[1]


            Johnny, you shouldn’t tell such obvious lies.

          5. pgl

            January 4, 2023 at 10:21 am
            Based on a Google search, The war narrative only started in December, 2021.”

            Come on Jonny – we all know you have no clue how to use Google. Of course Putin has rigged the internet in the Kremlin so it is no wonder that his pet poodle cannot properly use the internet.

          6. JohnH

            Headline from WSJ, dated December 19, 2021: “Sky-High Lumber Prices Are Back”

            Yes, lumber prices rose in Fall, 2021, contrary to what some claim. “Pricing service Random Lengths said that its framing composite index, which tracks on-the-spot sales, has jumped 65% since October.” This is exactly what an insider insider predicted in the Summer of 2021.

            No, Russia was not cited as a factor in driving up lumber prices, contrary to what MacroDucky, pgl, and others claim.

            But an entirely foreseeable factor–Biden’s tariffs on Canadian lumber–were cited and should have been taken into account by the esteemed economists here.

            I rest my case.

        2. pgl

          Here is something else Jonny boy does not understand. The sawmill companies may have established some sort of market power, which anyone would know if they bothered to study this sector. But Jonny boy blames Home Depot and Lowe’s? Yea – Jonny boy has no clue even how lumber is made.

          Now one could go read the 10-K filings of the major players in the timber and lumber sector as I have asked Jonny boy to do. Oh wait – Jonny boy does not even know what a 10-K filing even is.

          1. JohnH

            Why is pgl so protective of Lowe’s and Home Depot? Does he think that they’re warm and fuzzy behemoths who wouldn’t ever think of opportunistically screwing the customer? Or does he have a sinecure with them?

          2. pgl

            January 4, 2023 at 3:04 pm
            Why is pgl so protective of Lowe’s and Home Depot?

            Why are you such a moron? I have never said these two companies were saints. What I said is:

            (1) You do not understand the market structure as in the market power resides with the sawmills not the retailers;
            (2) You do not understand the concept of vertical integration;
            (3) You do not even get the data you and others cite represents WHOLESALE prices not retail prices; and
            (4) You never learned to read the 10-K’s for either Home Depot/Lowe’s versus say Weyerhauser.

            In fact you have no clue who Weyerhauser even is. No Jonny boy does not understand a single thing. And yet Jonny boy continues to comment proving what a LYING MORON he really is.

            Keep it up troll as this is really funny.

        1. JohnH

          pal has lost his map. And he still thinks that lumber prices fell in Fall, 2021! Would like me to count the number of days they fell? It would be a very small number!

  4. pgl

    The funniest part of JohnH’s comment which tried to deny that lumber prices fell in the summer of 2021 was the headline of his own chosen link:

    ‘Lumber prices are down 68% — but there’s a catch
    August 2, 2021 at 9:58 AM EDT’

    I think I originally credited the knack of not reading one’s own link to Bruce Hall but it seems JohnH has mastered this trick as well.

    1. JohnH

      Agreed…lumber prices fell briefly in Summer, 2021…before they rose again in Fall, 2021. It was only after the second prices rise that Team Transitory began to reconsider its wishful thinking that inflation was transitory.

      1. pgl

        Team Transitory? We asked you before to tell us who is on this team and what they actually said. You didn’t before so repeating this lie does nothing but show you’re a lying idiot.

  5. pgl

    The debacle in the House over McCarthy failing over and over again to be elected Speaker is being covered over at Kevin Drum’s place:

    The comments are precious. My favorite?

    ‘I think the Republicans should coalesce around the man who most exemplifies their Party and what it stands for. Of course, I mean George Santos.’

      1. pgl

        I sort of remember that story about Ohio State wrestlers. For some reason, this reminded me of this “rule”

        Dead girl / live boy
        Political term indicating the high level of catastrophe it would take to unseat a seemingly invincible politician, executive or tenured professor.
        Q: “Is there any chance he’ll lose reelection?”
        A: “Are you kidding? Guy’s so powerful, it’d take a dead girl / live boy.”

        Of course this rule is more popular among critiques of UK Tories.

  6. Macroduck

    Johnny has to have something to hyperventilate about, so he can blame, variously: economists; Democrats; statisticians; the U.S.; motherhood; and Menzie. Only underwear gnomes are spared, because Johnny admires their way of thinking.

    Hyperventilation is the point of what he does. Reality, consistency, honesty – who cares? Second cousin to Q – IT’S ALL A CONSPIRACY!!! I MUST WARN THE KING!!!

  7. pgl

    Vladimir Putin has been accused by his own people of letting Russians ‘freeze to death’ amid his war against Ukraine. The president is pumping countless rubles into military efforts some 10 months after an invasion that many expected would serve a quick Russian victory. But people in the capital city of the Russian Sakha Republic, Yakutsk, are wondering whether this money could be better spent on Russians themselves. Over the New Year, temperatures plummeted to a biting -46°C at a time when energy infrastructure remains broken – if it isn’t frozen solid, that is. One scarf-wrapped person said: ‘Why don’t we have support from the state now? They categorically refused [to help].

    How cold is that? It turns out that -40 degrees C = -40 degrees F so this is negative 50.8% F, Now that is incredibly cold. And of course Putin could care less that his own citizens are suffering.

  8. JohnH

    The NASDAQ spot price chart clearly show that lumber bottomed at $468 on Aug 16, 2021 and then rose to to $1157 by the end of the year. By my reckoning that rise coincides with Fall, 2021. (Most of 4Q occurs in Fall.)

    Only last November did NASDAQ spot prices return to their 2019-2020 levels, something confirmed by the futures numbers on the chart but not the PPI lumber figure

    This pattern is consistent with what I can visually discern from the chart above. (It would be nice to have a link to the data or a table showing the data. The NASDAQ chart incorporates the data right into the chart via mouse-over.)

    1. pgl

      And we thought Princeton Steve was the master at incoherent babbling. No – Jonny boy has this hands down.

      1. JohnH

        Pal’s cognitive capabilities collapse when confronted with facts that refute his nonsense. All he can do then is trash talk…heaps and heaps ofBS.

        1. pgl

          Gee – Princeton Steve try as he might cannot compete with Jonny boy for most worthless troll ever.

    2. pgl

      I suspect your chart here is tracking wholesale lumber prices and not the retail prices charged by Lowe’s. If it is – your entire retailer market power thesis falls flat on its face. Then again – you never understood the market structure of how trees become 2 by 4’s even though it is a very simple market structure with things like vertical integration. Oh wait – you never understood vertical integration either. Never mind.

  9. pgl

    If I had a subscription to this journal, I would provide more:

    Home Builders Sue Lumber Distributors for ‘Unreal’ Price Gouging
    May 6, 2021, 5:02 PM

    Court: S.D. Miss.
    Track Docket: No. 3:21-cv-00309 (Bloomberg Law Subscription)
    Judge: Henry T. Wingate (Bloomberg Law Subscription)
    Company Info: Georgia Pacific LLC, Interfor Corp., Idaho Forest Group, RSG Forest Products Inc., Sierra Pacific Industries (Bloomberg Law Subscription)

    A group of residential builders filed an antitrust lawsuit against multiple lumber distributors, alleging that they colluded to raise prices amid increased demand spurred by extreme weather events and the coronavirus pandemic. The complaint, filed in the U.S. District Court for the Southern District of Mississippi, said 10 lumber companies each “used its dominant position in the lumber industry and during COVID-19 to drive up the prices of lumber and force Plaintiffs to pay unreal prices for lumber that was necessary to sustain their business.” The lumber companies named in the suit—including Georgia-Pacific LLC, Sierra Pacific Industries, Idaho Forest Group, …

    Yea – there may be market power in the lumber sector but the defendants in this case are not Home Depot and Lowe’s as JohnH kept complaining about. No – the market power being alleged here is more upstream as in timber companies, sawmills, and wholesale distributors – not retail shops.

    Look anti-trust issues are important which is why the grown ups would never leave to Know Nothings like JohnH.

    1. JohnH

      pgl forgets that my point at the time (July 2021) was that while economists were celebrating lower lumber prices, consumers were not seeing lower prices.

      Pgl had nothing constructive to say about the problem. But he sure loves to mock any suspicion of companies in concentrated markets using their pricing power to slow the reduction of retail prices. Like most economists, he also refuses to believe that corporations help drive inflation!

      1. pgl

        “pgl forgets that my point at the time (July 2021) was that while economists were celebrating lower lumber prices, consumers were not seeing lower prices.”

        Gee – I never saw anyone celebrating. I guess I was not invited to your little party there.

        ‘Pgl had nothing constructive to say about the problem.’

        Figuring out that maybe it was the sawmills who saw the profits and not Home Depot is “nothing constructive”? Hey troll – learn to read a damn 10K filing,

      2. pgl

        “Pgl had nothing constructive to say about the problem”

        What a dumb comment. You can’t even define “the problem”. Now I get why you did not say anything about that anti-trust lawsuit against certain members of the lumber sector:


        Huh – this lawsuit is not going after Home Depot or Lowe’s which Jonny boy claimed had set up an oligopoly, Of course nowhere in their 10-K filings or their financials is any indication that their lumber retail margins rose. Oh I’m sorry – you never read their 10-K filings.

        I give you a challenge Jonny boy. What are these companies named as defendants? What role do they play in the lumber sector. I would suggest you spend some time with their 10-K filings as they are incredibly informative. Oh I’m sorry – you do not know what a 10-K filing even is. Never mind.

      3. pgl

        “But he sure loves to mock any suspicion of companies in concentrated markets using their pricing power to slow the reduction of retail prices.”

        Lord – you are the dumbest troll ever. Do you even have a clue what “concentrated markets” mean. I mocked the idea that it was a retailer cartel. But there does seem to be market power at the wholesale level as in the standalone sawmill as well as the vertically integrated timber REITS that own sawmills.

        Oh wait – you do not know what I mean by vertical integration even is. Nor do you have the slightest clue how the lumber market is structured – do you. Come on Jonny – I get you do not even know lumber comes from trees.

        BTW moron – the prices you are looking at in these time series are likely wholesale prices not retail prices. Oh wait – you do not even know the difference there either.

          1. pgl

            Paul Franke is your economic guru? Lord – you are an incompetent boob. There is a ton of evidence about the sawmill sector being the issue. Even Village Idiot Bruce Hall found something useful on this aspect of the market structure. But Jonny boy is following someone who’s entire existence is following Home Depot???

            Jonny – I get you are mad that the lawyers going after the sawmill cartel did not hire you as their experts but then that makes these attorneys smart.

          2. pgl

            Huh – your guru was looking at overall sales which is a lot more than lumber:

            ‘Together they accounted for nearly 50% of 2019 hardware and home improvement retail activity.’

            Have you ever even been in a Home Depot or Lowe’s. They sell a lot of things other than lumber. Yea Franke showed their consolidated margins. Now we asked you several times to figure out what happened to the segment operating margin for lumber and you haven’t.

            Come on Jonny boy – I would never have guessed someone could be as incompetent as you are.

          3. pgl

            “Funny how pgl consistency defends concentrated industries…to the point of denying their existence.”

            I am saying we may have a concentrated sawmill sector. I have said this over and over. So this disgusting attempt to smear is your usual pointless little lying. Come on Jonny – time for you to grow up.

          4. pgl

            Hey Jonny – did you not notice the DATE of his discussion? Jul. 10, 2020

            I guess that is why your little expert never mentioned this lumber issue you keep lying about. BTW – he notes that Home Depot’s gross margin was just over 34% in 2019. I checked their 10-K and he was right. I also checked the gross margin for 2021 – and it was lower than what it was in 2019.

            So this also undermines your little retail duopoly explanation for high lumber prices in 2021.

            Come on Jonny – even Bruce Hall is not this INCRECDIBLY STUPID.

  10. Macroduck

    Well, crud. Greece and Turkey are finding new (well, maybe not exactly new) ways to cheese each other off. This:

    Has led to this:

    Background to the issue, as I understand it, is that there is no international agreement nor a bilateral treaty which establishes rules for territorial waters in the Aegean. Greece and Turkey have both unilaterally declared 6 mile territorial limits, with a bunch of rules for interpreting those limits. Greece has adopted the UN Convention on the Law of the Seas and asserts that the UNCLOS grants it the right to extend its territorial waters to the South and West of Cyprus – away from, rather than toward, Turkey. Turkey has not adopted UNCLOS because UNCLOS doesn’t work out in Turkey’s favor in the Aegean. Turkey is officially annoyed that Greece’s many islands mean Greece already claims 40% of the Aegean.

    A picture of current territorial waters in the Aegean show both that an additional 6 mile extention of Greek territory wouldn’t have much direct effect on Turkey and that Greece already holds a heck of a lot of the Aegean:

    The fact that this is an election year in Greece may have something to do with timing. The New Democratic party won an outright majority in 2019 but is currently polling at only 36%:

    The Turks know this. Perhaps it’ll all blow over after the July vote, though reports indicate Greece intends to go through with the extension in March. It’s also possible Greece is using this issue to drive a wedge between the EU and Turkey; the EU has adopted UNCLOS and Turkey is already in bad odor with the EU overhand-holding with Russia. Could be a combination of internal and international politics.

    1. Moses Herzog

      I don’t think Greece wants to push their luck there. Kind of like a ballet troupe taking on the Philadelphia Flyers Hockey team at the ice rink on Free Beer Night.

      1. Macroduck

        That and Erdogan is pretty smart. Not a good person, but smart. War talk is one thing, war quite another. He has seen how democratic Europe has responded to war against Ukraine. It’s hard to imagine military action against Turkey, easy to imagine economic sanctions.

        Black Sea grain shipments would be a serious worry if Erdogan faced sanctions.

  11. Macroduck

    As numbers against Kevin McCarthy’s speakership rose with each of today’s House votes, support among Republican defectors coalesced behind Ohio’s Jim Jordan. Jordan claims credit for getting the Tea Party going, was Trump’s favorite guy in the House and…nominated McCarthy for at least one speakership ballot today.

    I don’t know if rank-and-file members of the GOP caucus think Jordan is acceptable, but there is obviously a serious effort to get him the job. Fun and games aside, that’s bad. Deal-making is underway.

    Also worth noting is that the House is about as evenly split as it can be – the public did not provide a mandate for right-wing, Trump-loving, insurrection-ignoring, truth-twisting House leadership. The very factionalism warned against by the Founding Fathers is the only reason someone like Jordan has a prayer of winning the speakership – assuming he has a prayer.

    Here’s an outsider’s view of Jordan’s career in the House, for those who’d like to brush up:

  12. Macroduck

    Speaking of Jim Jordan’s aspirations to the speakership, the last wrestling coach Republicans picked as Speaker ended up in prison for molesting the boys he coached. You’d think Republicans would learn.

    1. Moses Herzog

      It is super-weirdly coincidental isn’t it?!?!?!!? It makes me think of the first Matrix film. Philip K Dick, and some of William Burroughs’ novels, short stories, and comedy skits.

      Even though I am very aware that Menzie prefers us stay on blog topic [ In my mind’s eye I can see Menzie rolling his eyes to the back of his head after I have broke this mostly unstated, mildly-flexible rule so many times ] I like to think that since this post is just about a single commodity there is a subtext that this blog thread can be a little more free-wheeling. In that vein and the fact the last 16 hours or so we have seen tons of talk about Kevin McCarthy, I just found this link tonight and wanted to share it, even though it is from November. I think there is only 1 person who could possibly “out do” Professor Chinn or Paul Krugman as my favorite blogger and that is James Kwak.

      You would know that I have great affection for James Kwak’s writings and thoughts just from his opening sentence there.

    2. pgl

      Dennis Hastert was sixth in line behind Newt. The House Republicans were impeaching Clinton for adultery and the fact that Newt was a serial cheater became a problem. But the Republican leadership turned out to have one adulterer after another. Hastert was not cheating with a woman. No he preferred young boys. Family Values!

  13. pgl

    I have a data question for our host. These series of lumber prices – as that macrotrends series – strike me as wholesale prices not the retail price charged by Home Depot or Lowe’s. Is that correct?

    I ask because Jonny boy started his nonsense way back then saying there was some retail shop cartel driving up the margins for companies like Home Depot. But my limited understanding of the economics of lumber is that there are fewer and fewer sawmill companies or integrated timber REITs (see e.g. Weyerhaeuser) as these companies have been merging, which strike me as what is going on with the lawsuit file back in May 2021.

    Now Jonny boy can tell us all about the rising in reported lumber prices but if these are wholesale prices and not retail prices then his pet explanation is just wrong.

    1. Menzie Chinn Post author

      pgl: PPI is price received by producer of goods, in this case lumber. Hence, in this case, the lumber price is not the retail price received by e.g. Home Depot.

      Macrotrends futures prices are prices for buying/selling on futures market, so certainly would not necessarily be the prices retailers are charging.

      I thought it unnecessary to tell people JohnH’s explanation was wrong, since his interpretations have typically been contra-indicators for understanding in the past (i.e., he is almost always wrong).

      1. pgl

        Thank you for the data clarification, which of course completely undermines JohnH’s retail cartel nonsense. Now there may be emerging market power for the vertically integrated sawmill/timber companies. I suspect that is what this new lawsuit is all about.

        One advice for the plaintiffs. DO NOT hire JohnH as their expert witness lest the defendants win on summary judgment.

        1. JohnH

          A recommendation like that should be enough for anyone to get a job as an economic forecaster. Good pay and no accountability! Does it get any better than that?

          Did I ever tell about the flight I shared with an econometrician who had retired to become a standup comedian?

          Since I was in the midst of a corporate planning process, I asked her what she thought GDP was going to be the next year.

          Her answer, “What do you want it to be?”

          In my experience of many, many forecasting exercises, that summed it up nicely…

          1. pgl

            Now that was a weird emotional rant especially from someone who has gotten EVERYTHING wrong on this issue.

            I’m sorry Jonny boy but those plaintiff attorneys suing the sawmill cartel is not going to hire you as an expert witness because they know after the defendants file a Daubert motion, their case would be dismissed on summary judgment.

    2. JohnH

      Who said it was a retail cartel? Fact is, temporary lumber price reductions were not reaching consumers.

      Of course, pgl has no clue…nor does he care…why retail lumber prices are sticky on the downside but not on the upside.

      1. pgl

        “Who said it was a retail cartel?”

        There was this troll named JohnH would made this claim over and over again. Maybe you should contact is moron and tell him not to pose under your name.

      2. pgl

        January 4, 2023 at 1:05 pm
        I’m not the only one who thinks that Lowes and Home Depot are a duopoly.

        January 4, 2023 at 11:39 am
        Who said it was a retail cartel?

        Well you did not 90 minutes later! Jonny – you are a really awful liar. Maybe you should stop lying as we all know when you do.

      3. pgl

        “pgl has no clue…nor does he care”

        This is why EVERYONE hates you. I do care about ensuing more competition as do almost every economist out there. But when reality bites Jonny boy’s stupid pet “theories”, he wants to whine that he is the only person who cares and he is somehow smarter than everyone else.

        No Jonny boy – you are incredibly STUPID. And your attempt to paint economists are uncaring are just disgusting lies. Grow up troll.

      4. pgl

        “why retail lumber prices are sticky on the downside but not on the upside.”

        New post that actually shows retail rather than wholesale prices. Gee – they fell a lot too! Come on Jonny – you got EVERYTHING wrong. EVERYTHING!

      1. pgl

        I am very angry that Putin is killing Ukrainians. No you are the disgusting troll who celebrates their deaths.

  14. pgl,the%20raw%20material%20-%20is%20at%20record%20lows.

    The Strange Economics of the Lumber Market
    There’s a disconnect in the lumber market. The price of lumber is the highest it’s ever been, but the price of the timber – the raw material – is at record lows. WSJ’s Ryan Dezember on the paradox of the lumber market and tree farmer Joe Hopkins on how he’s getting through this strange moment

    It is an 18 minute podcast which pointed out that while lumber prices may have risen during the housing boom but timber prices had not risen all that much – a point I already noted. Now Joe Hopkins has a heavy south Georgia accent as he notes how much pine wood is grown in Georgia.

    Alas – there was no much in terms of actual economics in this WSJ podcast but at least they were not dumb enough to blame Home Depot.

  15. pgl

    BTW – I was too hard on this 18 minute WSJ podcast. Listen to the end and they do get around to the consolidation among sawmills. Yep – that was the market structure explanation I was noting. But poor little Jonny boy thinks I did not add anything useful to this issue. Yea – Jonny boy is THAT STUPID.

  16. pgl

    BNN Bloomberg found this old dude up in British Columbia:

    He is also concerned about consolidation in the sawmill sector arguing this is part of the reason for high wholesale lumber prices. So is there a market power issue? Well – it is not at the retail distribution level but it is possibly among sawmills.

    Again – the plaintiffs in that lawsuit will need expert witnesses. I would suggest someone who understands this issue – which clearly excludes JohnH.

  17. pgl

    This story is part of ‘the problem’:

    SPOKANE, Wash. & ATLANTA, September 14, 2022–(BUSINESS WIRE)–PotlatchDeltic Corporation (Nasdaq: PCH) (“PotlatchDeltic”) announced today the successful completion of the previously announced merger of CatchMark Timber Trust, Inc. (“CatchMark”) with PotlatchDeltic in an all-stock transaction, creating a leading integrated timber REIT. All closing conditions have been met. The combination brings together two high quality timberland REITs resulting in PotlatchDeltic owning nearly 2.2 million acres of diversified timberlands, including 626,000 acres in Idaho and over 1.5 million acres in strengthening markets in the U.S. South. PotlatchDeltic also remains the timber REIT with the most leverage to lumber prices, including 1.1 billion board feet of lumber capacity. The transaction also combines two successful and complementary real estate businesses.

    Potlatch and Deltic merged in 2018. Team Trump let this anti-competitive merger stand. Now they acquire CatchMark? Yea there is a problem with the vertical integration and consolidation of the sawmill and timber sector. But JohnH claims “the problem” was that his little town had only a few retailers? Yea I mocked JohnH’s feeble story as Jonny missed totally missed the real issue.

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