Why Lumber Demand Will Not Truly Move Until the Fed Starts Chopping

StoneX Media

Mon, 10 Aug 2026, 11:49

Lumber demand is being shaped less by the price of lumber itself and more by mortgage rates and the health of the housing market. With housing starts and permits flat for three years and mortgage rates sitting at elevated levels, buyers are constrained by affordability, and lumber demand has held range-bound as a result. The recent selloff in lumber futures did little to change that, because the move came from commodity fund positioning rather than a shift in physical buying. For the producers, buyers and home builders across the lumber supply chain, the more pressing question is what happens to demand when borrowing costs finally ease.

Alex Mead is a Risk Manager in StoneX's Forestry Group, based in Kansas City, where he specializes in lumber futures and options and has worked in the forest products markets for over a decade.

Key Themes from the Discussion

Lumber prices fell about 13% in two weeks, driven by commodity funds flipping net short rather than by weaker demand.
Housing starts and permits have stayed flat for three years, holding lumber demand range-bound despite elevated mortgage rates.
Canadian lumber shipments have fallen roughly 4 billion board feet in four years as sawmills cut output.

Watch the Full Conversation

Discover Actionable Insights with StoneX Market Intelligence

Lumber Demand Tracks Federal Reserve Signals Over Current Rates

"The mortgage rates really are not having a significant impact because we're having this range bound trade", Mead said, pointing to a lumber market where today's borrowing costs matter less than what traders expect next. Lumber demand is being steered by expectations for Federal Reserve policy rather than the level of mortgage rates at any single moment. He frames the swing factor as anticipation of the central bank's next decision rather than the rate on offer today. As a result, lumber demand has stayed range-bound, waiting on a clear signal that rate cuts are coming instead of reacting to the current cost of borrowing. That leaves lumber demand unusually sensitive to the Federal Reserve's guidance, where a shift in tone can matter more than any single data release.

Lumber Demand Faces Sharper Swings When Rates Finally Fall

Lumber demand is positioned to accelerate faster than supply can respond once borrowing costs ease, setting up a more volatile market. Housing demand has been held down by affordability, yet lower rates would release buyers that flat starts have kept on the sidelines, while physical supply cannot ramp up at the same speed. The imbalance matters because Canadian output has been shrinking for years, leaving little slack to meet a rebound in lumber demand. Consequently, a demand recovery would likely translate into wider price swings rather than a smooth adjustment. According to Mead, "supply is that slow moving tanker out in the ocean and demand is that speed boat", a mismatch that turns any pickup in demand into a source of volatility.

Make Market Insights Your Competitive Advantage

Access live prices, supply and demand data and actionable market commentary across commodities, equities, currencies and more. Sign up for StoneX Market Intelligence today and receive a 14-day trial.

--- Written by Gus Farrow, Senior Manager, StoneX Media

--- Expert: Alex Mead, Risk Manager, Forestry Group

Forest Products

This material should be construed as the solicitation of an account, order, and/or services and represents the opinions and viewpoints of the individual authors or presenters. It does not constitute an individualized recommendation or take into account the particular trading objectives, financial situations, or needs of individual customers.

The views are current only through the date stated and are subject to change at any time based upon market or other conditions, and StoneX Group Inc. (“SGI”) disclaims any responsibility to update such views. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. Past performance does not guarantee future results.

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided.

References to certain OTC products or swaps are made on behalf of StoneX Markets, LLC (SXM), a member of the National Futures Association (NFA) and provisionally registered with the U.S. Commodity Futures Trading Commission (CFTC) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ and who have been accepted as customers of SXM.

StoneX Financial Inc. (SFI) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI is registered with the U.S. Securities and Exchange Commission (SEC) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Advisor. StoneX Financial (Canada) Inc. (SFCI) is registered in Canada and is a member of CIRO and CIPF. References to certain securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to certain exchange-traded futures and options are made on behalf of the FCM Division of SFI. Wealth Management is offered through SA Stone Wealth Management Inc., member FINRA/SIPC, and SA Stone Investment Advisors Inc., an SEC-registered investment advisor, both wholly owned subsidiaries of SGI.

R.J. O’Brien & Associates, LLC (RJO) is registered with the CFTC as a Futures Commission Merchant and is a member of NFA.

StoneX Financial Ltd (SFL) is registered in England and Wales, company no. 5616586. SFL is authorized and regulated by the Financial Conduct Authority (FCA) (registration number FRN:446717) to provide services to professional and eligible customers including: arrangement, execution and, where required, clearing derivative transactions in exchange traded futures and options. SFL is also authorized to engage in the arrangement and execution of transactions in certain OTC products, certain securities trading, precious metals trading and payment services to eligible customers. SFL is authorized and regulated by the FCA under the Payment Services Regulations 2017 for the provision of payment services. SFL is a category 1 ring-dealing member of the London Metal Exchange. In addition SFL also engages in other physically delivered commodities business and other general business activities which are unregulated and not required to be authorized by the FCA.

This communication is issued in the European Economic Area by StoneX Financial Europe GmbH (SFEG). StoneX is the trade name used by STONEX GROUP INC. and all its associated entities and subsidiaries. StoneX Financial Europe GmbH (“SFEG”) is a securities trading firm registered in Germany under Company No. HRB 80844.

StoneX Financial Pte Ltd (Co. Reg. No 201130598R) (“SFP”) is regulated by the Monetary Authority of Singapore and is a Capital Markets Service Licence holder (for dealing in capital market products), an Exempt Financial Adviser (for advising on investment products and issuing or promulgating analyses/ reports on investment products) and a Major Payment Institution (for domestic and cross-border money transfer services).

SFP may distribute analysis/report produced by its respective foreign affiliates within the StoneX Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations Recipients should contact SFP at (65) 6309 1000 for any matters arising from, or in connection with, this webinar.

StoneX APAC Pte. Ltd. (“SAP”) (Co. Reg. No 200616676W) is regulated as a Dealer (PS20190001002) under the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019 for purposes of anti-money laundering and countering the financing of terrorism.

StoneX Financial (HK) Limited (CE No.: BCQ152) (“SHK”) is regulated by the Hong Kong Securities and Futures Commission for Dealing in Securities and Dealing in Futures Contracts.

StoneX Financial Pty Ltd (ACN 141 774 727) holds an Australian Financial Service License (AFSL: 345646) for Dealing in Securities, Exchange-Traded Derivatives Contracts, OTC Derivatives Contracts and Foreign Exchange Contracts, and is regulated by the Australian Securities and Investments Commission.

StoneX Securities Co., Ltd. (“SSJ”) (Co. Reg. No 010401047199) is regulated by the Japanese Financial Services Agency as a Type-I Financial Instruments Business Operator (Kanto Local Finance Bureau (FIBO)No.291’), is a member of the Financial Futures Association of Japan for dealing and broking FX and FX Option transactions, and is a member of the Japan Securities Dealers Association for dealing and broking stock indices and option transactions.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. Past performance of any futures or option is not indicative of future success. Indicators are not a trading system and are not published as a specific trade recommendation. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

The report/analysis herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

Satellite view of Earth at night showing illuminated cities across Asia and the Middle East

Discover more insights

Our subscribers have access to comprehensive market analysis from StoneX spanning commodities, equities, currencies and more.

Explore subscriptions

Perspective: Morning Commentary for November 11

November 11 – Stock futures are pointing to a stronger open, particularly in the tech heavy Nasdaq following a fresh sigh of relief for the sector after CoreWeave’s third quarter earnings results. The mood on Wall Street is calming as the VIX is notably lower to start the day, currently hovering at its lowest level in a week near the 18.4 mark. The dollar is adding to yesterday’s gains after the hotter than expected October CPI data reinforced fears of a more hawkish Fed, currently up 0.5% to trade at 102.73. Treasury yields surged higher yesterday but markets are closed today in observance of Veterans Day; 2-year yields yesterday settled 20-basis points higher at 4.748%, 10-year yields just under 14-basis points higher at 5.00%, and 30-year yields 10-basis points higher at 5.358%. Crude oil prices are bouncing from sharp early week losses, with nearby WTI up 0.9% on the day to trade near $87.20 and nearby Brent up 1.5% to trade near $92.90. The ags are mixed to start the day, with corn and soybeans showing modest losses after the big post-WASDE jump yesterday, while the wheat complex is clinging to small gains at the break following fresh escalations between Russia and Ukraine that we’ll dive into below. Stock futures are pointing to a lower open in classic turnaround Tuesday fashion as they look to take back some of yesterday’s sharp gains. The VIX is up 5.7% from yesterday’s close, currently sitting just above 21, though well below the recent highs above 28 seen last week. The dollar is looking at a turnaround Tuesday as well, up 0.3% to trade near 102 at the time of writing. Treasury yields are sharply higher to start the session, with 2-year yields up near 15-basis points to trade near 4.70%, 10-year yields up 9-basis points to trade near 4.955%, and 30-year yields up 6-basis points to trade just below 5.32%. Crude oil prices are continuing lower amid de-escalatory rhetoric coming from the Trump administration, with nearby WTI down 2.2% on the day to trade below $84.50 while nearby Brent is down 3.4% to trade near $89.40. Meanwhile, the ags are quietly lower at the break.

Mike CastleWed, 11 Nov 2026, 13:57

Grains & Oilseeds
Energy
Dairy
Renewable Fuels
Meats & Livestock
Forest Products

Perspective: Morning Commentary for November 10

November 10 – October CPI inflation data came in slightly hotter than expected this morning, with headline CPI rising 0.4% month-on-month and core CPI rising 0.3% month-on-month, both of which were 0.1% above the average analyst estimate. Year-on-year figures were not published due to last October’s government shutdown, but we can interpolate using the CPI index itself. If we take the average of last September and November’s CPI index of 324.461, it would imply a headline CPI increase of 4.0% year-over-year, which would be an acceleration from the 3.7% seen in September and the hottest reading since May. Given the major build-up of inflationary pressures already seen at the producer level, it’s no surprise to see the pass-through to the consumer taking place, as we’ve been pointing to for months. Stock futures are pointing to a lower open in classic turnaround Tuesday fashion as they look to take back some of yesterday’s sharp gains. The VIX is up 5.7% from yesterday’s close, currently sitting just above 21, though well below the recent highs above 28 seen last week. The dollar is looking at a turnaround Tuesday as well, up 0.3% to trade near 102 at the time of writing. Treasury yields are sharply higher to start the session, with 2-year yields up near 15-basis points to trade near 4.70%, 10-year yields up 9-basis points to trade near 4.955%, and 30-year yields up 6-basis points to trade just below 5.32%. Crude oil prices are continuing lower amid de-escalatory rhetoric coming from the Trump administration, with nearby WTI down 2.2% on the day to trade below $84.50 while nearby Brent is down 3.4% to trade near $89.40. Meanwhile, the ags are quietly lower at the break.

Mike CastleTue, 10 Nov 2026, 14:22

Grains & Oilseeds
Energy
Dairy
Renewable Fuels
Meats & Livestock
Forest Products

Perspective: Morning Commentary for November 9

November 9 – Stock futures built on Friday’s consolidation, as value buyers slowly re-entered the market overnight. We’ll get key inflation data this week, with the consumer price index for October scheduled for release tomorrow, followed by the producer price index on Friday. Scheduled negotiations regarding both major wars on commodity logistics will also take place over the next few days. The VIX slid lower to trade near 23, while the dollar index slipped lower to trade near 101.8. Yields on 10-year Treasuries are trading near 4.83% this morning, while yields on 2-year Treasuries are trading near 4.52%. WTI crude oil prices are near $87, while Brent trades near $94 per barrel. The grain and oilseed complex traded mixed to weaker overnight, with traders now focused on tomorrow’s big USDA WASDE crop report.

Arlan SudermanMon, 09 Nov 2026, 14:25

Grains & Oilseeds
Energy
Dairy
Renewable Fuels
Meats & Livestock
Forest Products

StoneX: Your access to global markets

Our market expertise, advanced platforms, global reach, culture of full transparency and commitment to our clients’ success all set us apart in the financial marketplace.

Reach

With access to 40+ derivatives exchanges, 180+ foreign exchange markets, nearly every global securities marketplace and numerous bilateral liquidity venues, StoneX’s digital network and deep relationships can take clients anywhere they want to go.

Transparency

As a publicly traded company meeting the highest standards of regulatory compliance in the markets we serve, our financials and track record are matters of public record. StoneX’s commitment to “doing the right thing over the easy thing” sets us apart in the industry and helps us build respect, client trust and new partnerships.

Expertise

From our proprietary Market Intelligence platform to “boots-on-the-ground” expertise from award-winning traders and professionals, we connect our clients directly to actionable insights they can use to make more informed decisions and achieve their goals in the global markets.