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What is Lumber and how is it traded?

What is Lumber?

Lumber or Timber are two names for the same commodity—harvested wood that has been transformed into boards and planks, as part of wood production. Lumber is used for structural purposes primarily. Lumber also produces furniture, pulp, paper and other composites like plywood and particleboard.It is also used as fuel while cooking and heating.

Lumber is classified as either hardwood or softwood. Softwood comprises pine fir, spruce, cedar, hemlock, cypress, redwood and other conifer trees. Conifer trees have exposed seeds that are surrounded cones. Most conifer trees are evergreen. Some of the famous softwood trees in the U.S. are southern yellow pine and Douglas fir.

Softwood is easy to saw and nail, which is why it is ideally suited to make buildings, furniture and paper.

Hardwood consists of trees like oak and maple wood. These trees are mostly deciduous and broad-leaved.

Hardwood has many colors and patterns and is used traditionally for producing commercial products, pallets, high-end furniture, cabinets, flooring, tables, etc.

Rough lumber, consisting of both hardwood and softwood, is used to make furniture and other items that require some reshaping. Finished lumber comes in standard sizes and is used primarily in the construction industry for flooring.

Lumber is abundant in nature, though conservationists have pointed out that lumber is a finite source.

Lumber has been used for thousands of years to construct houses, carts, and several items of daily use. It is a widely traded commodity, and is used in a number of industrial applications. Its primary consumer is the construction industry that uses it as a raw material to build homes.

Lumber may suffer from some defects that may affect the price of the supply. These defects include chip marks, diagonal grains, torn grains and wane during processing or splinters due to improper seasoning. Lumber is also prone to fungi attacks (in high-moisture environments), termites, carpenter ants and woodboring beetles.

Each tree produces different type of lumber, which varies in grain, knots and natural wear. Lumber is usually categorized according to thickness or lengths. Lumber thickness is measured in inches, while lengths can be from 8 feet to 20 feet. The lumber futures contract is based on lumber of dimensions 2 inch by 4 inches. This is the most widely produced variety in America.

In order to produce lumber, trees are first felled and pruned of all leaves and branches. Then, they are cut into logs, transporter by trucks to sawmills for processing.

At the mills, logs are sawed into different sizes depending on existing demand and prices. The lumber is dried in kilns so that all moisture is removed from the wood. Next it is smoothed and graded.

The American Lumber Standard lays out very specific standards of dimensions, grade and moisture content, for lumber and is used across the U.S. This standardization is supervised by the American Lumber Standard Committee.

How is Lumber Used?

Softwood Lumber is used for residential home construction and remodelling of homes. Nearly half of the United States’ softwood is used up by the construction industry for boards and planks. As per the National Association of Home Builders, a home of around 2,400 square feet would need around 14,400 board feet of softwood. Our pallets, cabinets and flooring come from hardwood lumber.

Housing starts, published monthly by the U.S. Department of Commerce are popularly used to indicate residential construction activity, which further indicates the demand for lumber.

Currently, China imports around half of its softwood demand from North America.

As per global forecasts, Asia will become the largest consumer of lumber in the next five years, especially due to the growth of wood pellets and chips as biomass source. Brazil, China and Russia will also increase their output. 


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