Lumber Prices YTD vs. Timber ETFs

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Includes: CUT, IP, PCH, PCL, PKG, RYN, SPY, WOOD, WRK, WY
by: Mike Havrilla

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 (NYSEARCA:CUT), iShares S&P Global Timber & Forestry ETF (NASDAQ:WOOD), and the S&P 500 ETF (NYSEARCA: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 (NYSE:WY), Rayonier (NYSE:RYN), MeadWestvaco (MWV). The profile for WOOD includes 26 companies, with U.S.-listed holdings such as Rayonier, Plum Creek Timber (NYSE:PCL), Weyerhaeuser, Potlatch (NASDAQ:PCH), International Paper (NYSE:IP), and Packaging Corp. of America (NYSE:PKG).