Lumber Futures Contract Comes to an End, Replaced by New Contract to Revitalize Trading
After experiencing a significant surge in prices and volatility during the pandemic, the lumber futures contract will have its final trading session on Monday. The contract will be replaced by a new lumber-futures contract introduced by CME Group, the exchange operator, in an effort to revitalize trading in the market.
The new lumber-futures contract is designed to attract a broader range of traders. It represents a truckload of two-by-fours delivered to Chicago, as opposed to a train-car filled with lumber destined for the British Columbia interior. This change will enable traders to focus on the price of lumber as it is delivered to the end-user, rather than the logistics of getting it there.
Moreover, the new contract allows for the inclusion of eastern species, which will provide traders with greater flexibility in their trading strategies. The inclusion of eastern species will also help to balance out the supply and demand dynamics of the lumber market.
The lumber-futures market has been under a lot of pressure lately due to the pandemic. With the shutdown of sawmills and other lumber production facilities, the supply of lumber has been severely disrupted. This has led to a surge in lumber prices, which has made it difficult for builders and other end-users to obtain the lumber they need.
The surge in lumber prices has also led to increased volatility in the lumber-futures market. This has made it difficult for traders to predict the future direction of the market, which has led to a decline in trading activity.
The new lumber-futures contract is expected to help revitalize trading in the market. By providing traders with a more flexible and relevant contract, CME Group hopes to attract a broader range of participants and increase liquidity in the market.
The end of the lumber futures contract marks the end of an era in the lumber market. However, the introduction of the new contract represents an exciting new chapter in the market’s history. With the inclusion of eastern species and the focus on end-user delivery, the new contract is poised to bring greater transparency and efficiency to the lumber-futures market.