The Rising Influence of Rising Affluence

[DewDiligence]

(PCL)—Barron’s blurb on lumber prices:

http://online.barrons.com/article/SB50001424053111904582604576432110263390204.html

…investors should expect prices of [lumber] to yo-yo over the next several years. The rapid and huge growth of Chinese demand and the advent of commodity index funds have disrupted the seasonal trends in lumber prices that have persisted for decades.

In many ways, what's happening in the lumber market is a microcosm for the entire commodities asset class. But the factors behind these secular changes are felt much more acutely in lumber than, say, crude oil, because the market itself is so small. Total open interest across all lumber was at 8,801 contracts late last week. This compares with more than 1.5 million contracts in oil and almost 1.2 million in corn.