Lumber expert Stinson Dean discusses the recent crash in prices, factors affecting the market, and survival tactics for lumber mills. Insights into repair and remodel sector impact, challenges in the building supply industry, business diversification, and labor market dynamics are also explored.
Read more
AI Summary
Highlights
AI Chapters
Episode notes
auto_awesome
Podcast summary created with Snipd AI
Quick takeaways
Declining lumber prices signal economic activity, reflecting shifts in sector growth and inventory management.
Storage capacity is essential for managing lumber market volatility, allowing traders to hedge against price fluctuations and optimize inventory.
Deep dives
Growth of Direct Lending in Private Alternative Space
Direct lending has significantly expanded in recent years, providing capital to corporate borrowers and financial sponsors. This growth has supported corporate growth and strength, with private capital fueling their increasing expansion and prosperity in the market.
Impact of Falling Lumber Prices on Economic Growth
The decline in lumber prices is often seen as an indicator of economic activity. The slowing demand for lumber reflects weakened growth in certain sectors, such as repair and remodeling, alongside a shift towards lean inventory models and reluctance to build excessive stock due to high interest rates.
Strategic Importance of Storage in Lumber Trading
Storage plays a crucial role in navigating the volatility of lumber markets. Storing lumber helps hedge against price fluctuations, especially in a market offering high carry and contango. Having storage capacity enables traders to capitalize on carrying costs, manage inventory efficiently, and withstand market price swings.
Lumber prices have tumbled dramatically in recent weeks, with benchmark futures falling about 20% in the past four months alone. What's more, this is happening at the height of the summer homebuilding season, when there should theoretically be lots of demand for construction materials. In this episode of Lots More, we speak to one of our favorite guests about what's going on in the lumber market right now, and what falling prices might say about this important part of the US economy. Stinson Dean is the founder and owner of Deacon Lumber and he talks to us about why prices are crashing, what he's seeing in the market right now, and how the current environment differs from 2020 and 2021, when lumber prices went parabolic and mills couldn't keep up with demand.