Lumber futures fall as Canada-US trade deal hopes fade

Lumber futures fell below $580 per thousand board feet, retreating from a two-week high as hopes for a Canada-US trade deal faded.

Negotiations broke down ahead of the planned tariff deadline on Saturday, with the two sides discussing a deal that would have removed a 10% tariff on lumber.

The US had earlier imposed 50% tariffs on several Canadian lumber-related products, while softwood lumber was excluded, although existing duties of around 35% continued to weigh on demand.

US demand for Canadian lumber fell 1.7% in the first half of the year, while its market share declined slightly.

Meanwhile, weakness in the US housing market added pressure, with mortgage rates near one-year highs and housing starts falling 12.4% in July, driven by a sharp decline in single-family construction.

The Canadian government sees little prospect of negotiations resuming, although its counter-tariffs are not due to take effect until September 8th, potentially leaving room for further negotiations.