Lumber costs expected to remain elevated

By Iva Poshnjara

With lumber prices reaching record highs during the pandemic, one financial expert expects those costs to remain elevated as the industry has learned to remain cash flow positive.

Speaking with BNN Bloomberg’s Amber Kanwar on Thursday, Daryl Swetlishoff, senior managing director at Raymond James Ltd., explained that lumber companies realized during the pandemic that they don’t need to produce lumber at a loss and can instead close facilities to drive the price back up. Lumber prices are down by about 70 per cent since hitting a peak in May 2021, but remain about 25 per cent higher than they were at the start of 2020.

“It’s been a crazy two years of very high (and) very high volatile lumber prices and these companies have generated buckets and buckets of cash flow [in the] billions of dollars,” he stated.

Setyan recommended Interfor Corp. (IFP), West Fraser Timber Co. (WFG) and Canfor Corp. (CFP) as his three top picks in the lumber industry.

He, his family members, his firm do not own any of the stocks mentioned above, however his investment banking clients hold all three.