Dennis Gartman has an unhealthy obsession with lumber. The strength in the commodity most closely associated with housing continues to “fascinate” him as it continually moves higher.
However, the strength associated with lumber is not directly tied to our housing market or our construction recovery. In fact, it’s not even tied to us. The real rise of interest in lumber is tied to China and Canada. Turns out, China has been “quietly buying” lumber from Canada as the country’s housing boom continues to push on. In fact, Canadian exports of lumber to China rose a whopping 123% in 2009 compared to 2008.
Gartman points out that while the wood flowing into China is low grade, China has also ramped up purchases of premium woods as well. Thus, Canada’s lumber business is the hottest sector on the block right now – at least until China’s high rise housing bubble bursts. Gartman signals that the rising strength in lumber are signs of “very real global economic strength” and that is good news to hear.
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