With the Thanksgiving holiday and hunting season coming up, production will see a slight slowdown, as is usual for this time of year. While the housing sector was doing better on the U.S. side compared to Canada who experienced a slowdown during August and September, business owners were optimistic that market conditions would improve over late fall and early winter. Cabinet and flooring sectors are busy, but at a reduced rate, thus hardwoods are not selling as well as they were during the first half of the year. However, businesses remained cautiously optimistic as the bank rate dropped in early September, which helped, and with a couple more rate drops predicted for December and January, should ease pressure slightly.
Ash production is low, but green supplies are meeting market needs for common grades, while some shortages are experienced for other grades as well as for kiln-dried lumber. Basswood demand is seeing a dip, and is often seen as one of the worst selling species. However, kiln-dried inventories grew and were meeting market needs. Some mills reduced their Basswood log receipts, although maintained a steady production thus keeping pace with market demand. For some along the U.S. border states, salability of total grade lumber, cant, and pallet lumber is an issue with the warmer weather throughout September, while others saw wet conditions causing stain issues for unsalable green lumber and cants.
With the reduction in inventories of certain kiln-dried Soft Maple grades, decent activity was reported for good color Birch. Demand for the common grade and off-color upper grade stock was weak. Beech production was reduced at this time, but still surpassing market needs, and so prices had gone down. Yards and end users were absorbing green FAS and Select supplies, while mills struggled to obtain orders for common grades.
Hard Maple production increased over the summer as it was one of the best-selling species. Green supplies were not overwhelming demand, with prices being consistent. It was noted that common grades were moving, although not as well as for FAS. Prices were stable. Sales to the cabinet sector slowed more over the summer and into September rather than to moulding and millwork industries and to wholesalers. Kiln-dried inventories are low for good color FAS but up for the common grades. The situation is similar for green stock. Prices for upper grades are rising, while prices for No. 1 Common, No. 2A, and other grades are seen as flat to soft.
Contacts noted prices and demand of kiln-dried No. 1 Common and Better Red Oak had declined in the Appalachian region, while improving in Ontario and Quebec areas. It was also noted that more sawmills were processing more Hard Maple and holding off on Red Oak logs. Kiln-dried No. 1 Common and Better inventories were thin.
Even though availability of White Oak is limited, demand remains steady. As mills need to process whitewoods in a timely manner to avoid stain, production of White Oak has not been high, commented contacts. Mills and wholesalers are shipping total output, thus prices are firm.
The Bank of Canada reduced its target rate to 4¼ percent, with the Bank Rate at 4½ percent and the deposit rate at 4¼ percent. The Bank is continuing its policy of balance sheet normalization.
The global economy expanded by about 2½ percent in the second quarter, consistent with projections in the Bank’s July Monetary Policy Report. In the United States, economic growth was stronger than expected, led by consumption, but the labor market has slowed. Euro-area growth has been boosted by tourism and other services, while manufacturing has been soft. Inflation in both regions continues to moderate. In China, weak domestic demand weighed on economic growth.
In Canada, the economy grew by 2.1 percent in the second quarter, led by government spending and business investment. This was slightly stronger than forecast in July, but preliminary indicators suggest that economic activity was soft through June and July. The labor market continues to slow, with little change in employment in recent months. Wage growth, however, remains elevated relative to productivity.
As expected, inflation slowed further to 2.5 percent in July. The Bank’s preferred measures of core inflation averaged around 2½ percent and the share of components of the consumer price index growing above 3 percent is roughly at its historical norm. High shelter price inflation is still the biggest contributor to total inflation but is starting to slow. Inflation also remains elevated in some other services.
With continued easing in broad inflationary pressures, Governing Council decided to reduce the policy interest rate by a further 25 basis points. Excess supply in the economy continues to put downward pressure on inflation, while price increases in shelter and some other services are holding inflation up. Governing Council is carefully assessing these opposing forces on inflation. Monetary policy decisions will be guided by incoming information and the Bank’s assessment of their implications for the inflation outlook. The Bank remains resolute in its commitment to restoring price stability for Canadians.
Federal officials said Canada’s wildfire season is on track to be the second largest in at least 20 years, trailing only last year’s record-breaking season. Above normal temperatures and drought conditions across parts of Canada have continued to drive fire activity, with 5.3 million hectares burned so far (preliminary number).
Yan Boulanger, research scientist at Natural Resources Canada, said climate change has contributed to earlier starts and later ends to the wildfire season, turning fire into a year-round phenomenon.
Boulanger said several of the last 10 years have been above the 25-year average for area burned, primarily due to extreme fire conditions and longer seasons, driven by climate change.
Officials say the 792 international firefighters who helped tackle blazes throughout the year have all since returned home.
