Lumber in midst of big Q4 surge, replicating seasonal trend

[MongiIG]

Lumber resurgence playing out, with seasonal patterns highlighting typical strong Q4 rally.

Source: Bloomberg

 Joshua Mahony | Senior Market Analyst, London | Publication date: Thursday 09 December 2021

Lumber trade up in the green

Lumber has been on a big ramp-up over the past month, building on the gains seen since the bottom in August.

We have written a number of pieces in recent months signalling the potential for just such a move to come to fruition. The long-term uptrend seen over the course of the past decade always pointed in the direction of another year-end surge.

That appears to be well underway, with prices hitting a six-month high today.

Source: ProRealTime

Seasonality shows pattern of year-end strength

From a seasonality perspective, we could see a strong chance of a fourth quarter (Q4) resurgence, with the collapse in quarter two and three (Q2-Q3) bringing that same setup for a year-end push higher.

 

On the daily chart, this recent drive higher can be put into some context, with price pushing higher once again after Tuesday’s volatility.

With that in mind, further short-term upside looks likely as we extend this lumber rally. A break below the $884 swing-low would be required to signal an impending retracement period.

Source: ProRealTime