Since the pandemic started in March, many commodities have appreciated significant gains. The gains have investors calling it a commodities supercycle.
Early in the pandemic, a broader market crash led commodities lower. Investors expected suppressed demand, but the opposite happened. And by the time that many companies had realized, it was too late.
Robust demand, COVID lockdowns, people staying at home because of enhanced unemployment benefits, and supply chain breakdowns led commodities higher. Douse that flame with a lil’ bit of fresh JPow Money Printer™ money and you’ve got a recipe for… big price moves in everything! 📈📈📈
Commodities went to the moon… it’s as if crypto traders checked out and started YOLOing all their money on lumber and hogs. Lumber was one of the commodities that appreciated the biggest gains. Alas, the lumber mania is over. We’ve gone through the trouble of annotating it for you below:
Many commodities are starting to fall as we return to business as usual. That’s great for companies involved in the manufacturing, production, and construction of goods. For lumber specifically, it’s a positive development for homebuilders. There were over 1.5 million housing starts in July, that was up 2.5% YoY. Unfortunately for consumers, lower lumber prices are unlikely to translate to cheaper houses anytime soon. 🏠🏠