Lumber Prices YTD vs. Timber ETFs

The accompanying table (click to enlarge ) includes a year-to-date analysis for near-month CME Random Length Lumber Futures (LB), Claymore/Clear Global Timber ETF (CUT), iShares S&P Global Timber & Forestry ETF (WOOD), and the S&P 500 ETF (SPY). The price of lumber has declined the least among the four, with a YTD loss of about 33% versus a 46.8% loss for WOOD, a 57.7% loss for CUT, and a loss of 42.8% for SPY. Over the past 12 years, near-month CME Lumber Futures have traded within a range of about $200-$450, which places the current price at key support levels.

An idea for a new commodity pool fund that invests in near-month lumber futures would provide investors with easier access to the timber asset class without investing in futures or having the stock-based exposure in existing ETFs such as CUT and WOOD. The profile for CUT includes 27 companies with about one-third based in the U.S., followed by about 14% from Japan – including companies such as Weyerhaeuser (WY), Rayonier (RYN), MeadWestvaco (MWV). The profile for WOOD includes 26 companies, with U.S.-listed holdings such as Rayonier, Plum Creek Timber (PCL), Weyerhaeuser, Potlatch (PCH), International Paper (IP), and Packaging Corp. of America (PKG).

Comments

[sbenard:]

I had been wondering how closely correlated the futures would be to the ETFs. Thanks for the info! I've noticed that commodity futures also tend to be somewhat less correlated to commodity stocks, following this same pattern.

2008 Nov 25 12:54 PM

[Mike Havrilla:]

Here is a link to 3 recent articles comparing the global price of coal futures to the 2 coal ETFs (KOL + PKOL) and other energy commodity funds:

www.etfinnovators.com/...


On Nov 25 12:54 PM sbenard wrote:

> I had been wondering how closely correlated the futures would be
> to the ETFs. Thanks for the info! I've noticed that commodity futures
> also tend to be somewhat less correlated to commodity stocks, following
> this same pattern.

2008 Nov 25 02:42 PM