One Year Analysis of Lumber Prices vs. Timber ETFs

The accompanying table [(click to enlarge) includes a 1-year 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 declines were similar for all four – with WOOD + SPY posting identical losses of 38.4% while lumber declined 40.3% and CUT fared the worst with a 51.6% decline. However, WOOD has only been trading since late June, so there is less than six full months of data to analyze.

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).

An idea for a new commodity pool fund that invests in lumber futures would provide investors with more direct access to the alternative asset class of timber, which is thoroughly analyzed in this recent Seeking Alpha article.

Comments

[User 5045:]

The Clear Global Timber Index does not seek to replicate timber prices. It is a proxy for timberland which has characteristics of timber (lumber, pulp and packaging), real estate and other natural resources. Next, with some research at clearindexes.com one would see that the index is weighted based on where land ownership is rather than where the public company is domiciled.

2008 Dec 19 02:14 PM

[1977°C:]

I love LUMBER.

Jan 02 01:28 PM