Lumber boosted by DIY demand

The huge rally in wood prices gained further momentum all week as quarantined homeowners ran to big box stores and lumberyards clamoring for supplies for framing fix-up projects. Building supply stores have been designated as essential businesses, remaining open throughout the pandemic.

Slower sawmill production, also COVID-related, contributed more fuel to the fire just as the demand accelerated. Longer term, record low mortgage rates build hopes that demand for new housing will be supported even if unemployment remains an issue.

On Friday, lumber for July delivery touched $525 per thousand board feet, nearly double the price on April first.

Drought fears gin-up cotton

Fears of deteriorating crop conditions propelled cotton prices to the highest level since early March. Dry weather has plagued a wide swath of America between Texas and California. Much of Texas is emerging into mid-summer short of subsoil moisture and fears of wildfires are even returning.

Domestic cotton purchases could be hurt due to COVID-related decline in demand but our largest importers, China and Vietnam, may be passing their peak concern about the outbreak and resume buying at near-normal levels. Cotton for December delivery was worth 64.5 cents per pound midday Friday.

Gold zooms over $1800

Gold prices exceeded $1,800 per ounce most of last week, reflecting concerns that government stimulus is not solving the economic damage from coronavirus and could eventually result in inflation such as occurred in the 1970s. Silver and copper, both boosted by resumed industrial demand, moved higher as well, with copper reaching new highs for the year.

Fears of the second wave of virus infections added to concerns that even greater and greater amounts of subsidies and government spending will eventually result in a debt that world economies, including our own, will be unable to repay without further diluting their money supply. More debt and money supply typically result in the value of paper money declining and metals increasing, or even exploding, in value.

The U.S. Federal Reserve’s policy of keeping interest rates near zero creates even more demand for gold as the cost of holding the metal is low, and the alternative of investing in interest-bearing accounts or bonds is unattractive.

Gold for immediate delivery traded midday Friday for $1,799 an ounce.