The price of timber has rocketed 409.4% in just a single year (futures exchange, price per 1,000 board feet). Listed companies in this sector have also seen significantly higher increases than cross-sector indices. As shown in a new infographic by Block-Builders.de, other commodities have also risen considerably in price.
Meanwhile, wood is in increasingly high demand. The Google Trend Score, an indicator of relative search volume, for the search term pair “buy timber” hit the highest possible value of one hundred in April 2021, meaning that demand is at its highest point in 5 years.
The infographic illustrates that the timber price rally is the result of various developments and factors. For example, some sawmills were closed for a longer period of time due to the pandemic, resulting in supply bottlenecks. There were also large-scale forest fires and in some cases severe damage to domestic tree populations. Long-term supply contracts with China also resulted in shortages in certain sectors of the market.
The Age of Raw Materials
The iShares Global Timber & Forestry ETF, which tracks the performance of the 25 largest companies in the timber and forestry sector, also rose significantly more than indices such as the Dow Jones or DAX over the last 12 months.
Yet wood is not the only commodity that is in high demand. Other goods have also risen sharply in price recently. For example, the price of corn has risen by 140.7% over the past year, while the price of copper has increased by 93.8%, as shown by data from a current “DEKA” study.
A large number of shareholders and other investors have benefited significantly from recent developments. It is a different story for many German production companies, of whom 45% report struggles with bottlenecks in the purchase of raw materials.