Why the Price of Lumber Has Soared Day After Day After Day

Joe Weisenthal (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:17)

And I'm Tracy Alloway.

Joe Weisenthal (0:19)

So Tracy, I'm guessing there isn't much construction of new homes anymore in Hong Kong, is there?

Tracy Alloway (0:26)

There's always some, but we definitely aren't having a housing boom like the US is.

Joe Weisenthal (0:32)

No, it is absolutely crazy what's going on here. There is a housing boom here, there is a renovation boom, people are buying existing houses, driving the prices up, people are starting new homes, like it's super wild what's going on here in real estate.

Tracy Alloway (0:48)

Yeah, so I've seen a lot of stories on this. And then of course, one of the things I've seen that's been really striking is the price chart of lumber.

And that's just been absolutely soaring and is actually like, I see it mentioned in the pantheon of meme stocks nowadays, but of course, lumber is an actual thing that people use to build homes and other important structures.

Joe Weisenthal (1:14)

No, it literally is like kind of becoming a meme stock, like lumber itself, like there's like meme stocks and crypto. And now people are making TikToks about the price of lumber. And the line literally is just a straight up for days. We're recording this April 21st. And actually the last two days, I think lumber actually sold off a bit. So maybe, I don't know, maybe there's some sort of peak. I have no idea. But the point is for like days and days in a row, the lumber futures market went up, limit up every single day. It's absolutely wild. And it's like becoming a cultural thing. How much would cost right now?

Tracy Alloway (1:50)

Yeah.

It's also sort of becoming a moment for, I guess, lumber Twitter, which is a really interesting community, as I think you recently discovered, right? There's a really vibrant conversation around the lumber industry and lumber trading construction, things like that online.

Lumber's having its moment in the sun. And I just have to say, this is our chance to dive into lumber market structure. I've been doing a little bit of research. It is an absolutely delightful market. Like just some of the terms that they use, like stumpage fee, that is such a great word.

Joe Weisenthal (2:27)

No, it's great. There's so much good stuff here because it's got its own market structure. There's the futures market.

There's the cash market. There's all these different entities. There's the lumber yards, the saw mills, the forests, where they sell timber, or turned into lumber. There's the home builders, everything. Just a super interesting market that up until very recently, probably very few people other than people in the industry had thought about. But now everyone wants to learn.

And you mentioned Lumber Twitter. It's kind of taking over everything. And the guests we're going to have on today, we recently had them on TV to talk about the lumber market.

And I've never posted a clip that got so many views. I think it was literally one of the biggest views ever. Everyone wanted to hear more from the guests. So we had to get them on the podcast to really do a true deep dive into what's going on right now and how a lumber market structure actually works.

Tracy Alloway (3:24)

For sure, let's do it.

Joe Weisenthal (3:25)

All right, so I'm very excited to go. We're going to go deep on the lumber market. We're going to be speaking with Stinson Dean. He is the CEO and founder of Deacon Trading, which is a lumber trading shop that operates all over the country. He's at Lumber Trading on Twitter. So he's sort of like become one of the preeminent lumber Twitter experts blowing up.

Now here, everyone wanted to hear him on Odd Lots and now he's here.

Stinson, thank you so much for coming on the show.

Stinson Dean (3:57)

Yeah, thanks for having me. I'm excited to talk potentially endlessly about all the nuances of lumber.

Joe Weisenthal (4:05)

We're gonna go super deep on lumber. We're gonna go beyond just the charts. But you know, like, so I have this idea. I'm an expert on lumber now because I've been paying attention to it for two weeks.

I have this idea that there's, you know, there's the home builders and they buy from the lumber yards and the lumber yards buy from the sawmills and the sawmills have a lot of pricing power these days and they so forth. But why don't you give us the sort of like very high level overview of the different players in this market and also specifically what Deacon Trading does and how it fits into the sort of the lumber trading ecosystem.