Lumber prices climbed to around $580 per thousand board feet in January, reaching a six-week high, as falling U.S. Treasury yields and a sharp rise in mortgage applications signaled robust demand for construction materials. The U.S. 10-year Treasury yield fell significantly after the latest CPI report revealed easing core inflation, bolstering expectations of Federal Reserve rate cuts by mid-year. Meanwhile, mortgage applications surged 33.3%, the largest weekly increase since 2020, despite mortgage rates exceeding 7% as buyers sought to lock in borrowing costs amid fears of rate hikes. Adding to the upward pressure, the looming prospect of a 25% tariff on Canadian softwood lumber imports prompted U.S. buyers to stockpile inventory, while existing duties averaging 14.4% already strain supply. Domestic production remains challenged by workforce shortages and mill closures, with reliance on Canadian imports critical as alternative suppliers lack the capacity to meet demand.
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