Lumber futures suffer from low volume and open interest, which refers to the total number of open long and short positions in the futures arena. The CME delisted the old random-length lumber futures contract, replacing it with a smaller and more flexible physical lumber contract. Still, the change has not led to more liquidity. Lumber futures have been trading around the $600 level in 2025, but the lack of liquidity could send prices significantly higher or lower in the blink of an eye. In a February 25, 2025, Barchart article that asked if lumber prices could break higher, I concluded:

The odds favor higher lumber prices over the coming months as the fundamental supply-demand balance suggests that lumber demand will increase. While lumber prices could move lower, the upside price potential remains far greater than the downside price risk in early 2025.   

The active month CME physical lumber futures contract was trading at $610 per 1,000 board feet on February 14, 2025, and remained near that level in June 2025. 

Higher highs as lumber trades around the $600 level

The CME’s physical lumber futures have been in a bullish trend since the July 2024 low of $455.50 per 1,000 board feet. 

The weekly chart indicates that lumber futures have formed higher lows and higher highs, reaching a peak of $699 per 1,000 board feet in March 2025. While the price has dropped below the $600 level, the pattern of higher lows remains intact in June 2025. 

Lumber remains a highly illiquid futures market. As of May 30, 2025, the physical lumber futures market had a total open interest of only 8,243 contracts. The average daily trading volume is below 1,000 contracts. Lumbers’ low liquidity can lead to substantial price volatility when bullish or bearish trends develop. Bids to purchase futures can disappear during declines, and offers to sell tend to evaporate during rallies, as the lumber market has witnessed over the past few years.

Seasonality suggests that a lumber rally may need to wait until 2026

Lumber tends to be a seasonal commodity, with prices peaking during late winter and early spring as the weather improves and construction activity increases. In 2021, the old random-length lumber futures rose to a record high of $1,711.20 per 1,000 board feet in May, and in 2022, reached a lower high of $1,477.40 in March. 

Given lumber’s history of reaching highs in spring, the market may need to wait until spring 2026 to make any substantial upside move. However, other factors will determine whether the bullish trend can continue, and another parabolic rally, as we witnessed in 2021 and 2022, may be on the horizon for 2026. 

Interest rates are critical- They remain stubbornly high

Elevated long-term interest rates have weighed on the lumber futures market as mortgage rates remain high, inhibiting new home and construction demand across the United States.  

The seven-year monthly chart of the U.S. 30-year Treasury bond futures illustrates the bearish trend in bonds that has kept interest and mortgage rates high. The long bond futures fell to a low of 107-04 in October 2023. At around 113, the long bond is much closer to the low than the March 2020 high. 

Another problem facing lumber is that home prices have soared. Record-high home prices and elevated mortgage rates have reduced the addressable market for new homebuyers, thus limiting construction and lumber demand. 

Levels to watch in the lumber futures arena

From a technical perspective, lumber futures are closer to technical support than resistance as the market has moved past the seasonally strong time of 2025. 

The daily chart of July lumber futures shows that technical support is at the May 6, 2025, low of $567.50, with technical resistance at the March 4, 2025, high of $710 per 1,000 board feet. Given lumber’s limited liquidity, any rally above the resistance or decline below the support could trigger a substantial move. 

The downside could be limited

Since 2020, the random-length lumber futures and the physical lumber futures that replaced the random-length contract have traded as low as $251.50 and as high as $1,711.20 per 1,000 board feet. 
Therefore, below the $600 level, the downside potential is limited, and the upside could become explosive. However, as lumber has moved past its seasonally bullish period, market participants may have to wait until next spring for a potential rally. Keep an eye on interest rates as declines could ignite pent-up demand for new homes, which could light a bullish fuse under the lumber futures arena.