The four graphs below are illustrative of our current situation. Lumber (top left) dropped to $200 per 1,000 board feet during COVID. It then ran up to almost $1,700 per 1,000 board feet in early May, only to fall to $700 now.
This is a perfect example of how demand outstripped supply due to COVID. During COVID, lumber mills were shut down. As we began to open our economy, our population moved from cities to the suburbs, because people wanted more space, they wanted a yard. This created demand for more houses, pushing the prices for lumber up. It wasn’t until the lumber mills fully opened that they could meet the demand. Once they were able to meet the demand, prices fell back to more normal levels.
The other commodities, Brent oil, poultry, and wheat give you an understanding of where prices have gone over the last year. Brent oil prices have gone up in value as the world’s economies have come back online. More demand, higher prices. Poultry prices are similar to what happened with lumber, tied with economic stimulus. Poultry plants shut down due to COVID. The economic stimulus packages are so rich in the United States that it is hard to motivate workers to go back to work. Even though these plants have reopened, they are working below capacity.