Woodman, Don’t Spare That Tree: Lumber Price Spiral Is Now Over

The tab for this construction-centric wood, which figures in many asset allocators’ alt strategies, has dropped back as production finally expands.


Looks like the Great Lumber Price Explosion is over. The near-month contract for the wood fell below $500 per 1,000 board feet this past week. This marks a 72% drop from the peak in the spring, a price surge that helped pump up home-buying costs.

Capital Economics projects that the price will stay between $500 and $600 up ahead, as demand for new homes, and thus lumber, continues. The prediction comes as the vexing shortage of lumber has disappeared amid restored production.

Timber is of interest to institutional investors, who have bet on it through the years, because it is a prime alternative investment, not correlated to stocks and bonds. Yale’s endowment was one of the first to invest in woodlands—part of its natural resources portfolio, which makes up 4% of its assets. The Ontario Teachers’ Pension Plan (OTPP) has the same level of commitment. The California Public Employees’ Retirement System (CalPERS) has dabbled in the area, too.

The price problem with lumber has been, first, that sawmills had cut back after the housing collapse a dozen years ago. Then came the pandemic’s onset in early 2020, which kept fearful mill hands from going to work. In May, the price topped out at $1,734. But now that lost production has been largely regained. As the mills came back to life, output has jumped by a third since November, by the count of Madison’s Lumber Reporter.

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So with improved supply, the lumber price has plunged, with the September contract settling at $492 per 1,000 board feet, as of Friday, according to CME Group. Indeed, the new price is high historically, but nothing like what it has been for much of this year. Over the past decade, amid so-so demand for housing, in light of the industry’s 2008 bust, the price has hovered just below $400.

Housing starts, after cratering amid the onset of the scourge last year, have rebounded mightily. Starts reached a 1.64 million annual rate in June, per the St. Louis Federal Reserve Bank. That’s up 75% from the April 2020 low. With nesting instincts strong, analysts say, the demand is likely to remain stoked for a while, which suggests an uptick in lumber to Capital Economics’ $500 to $600 band.

Caveats: A couple of other factors that could crimp some lumber production are focused on Canada. There’s a huge wildfire burning in British Columbia’s woodlands. Also, a US Commerce Department report recommended hiking tariffs on Canadian lumber to 18% from 9%, due to the Canadian forestry industry benefiting from government subsidies.

But the lumber industry remains optimistic. “What we’re finding is the support level that follows the bottom end of that continual trend pre-COVID is very, very bullish,” Kyle Little, chief operating officer (COO) at wholesale distributor Sherwood Lumber, told CNBC. “It’s also one that would be making a lot of us in the lumber world feel much more comfortable going and rebuilding inventory here for the second half of this year with the projected demand that we are now seeing.”

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Texas Christian University Seeks Its Second CIO

James Hille’s retirement after 15 years at the helm leaves big shoes to fill at the $2 billion endowment.


Texas Christian University (TCU) is looking for a new permanent chief investment officer for its $2 billion endowment after the retirement of James R. Hille, its first and only CIO.  

Hille, who had held the position since 2006, has been temporarily replaced by Jason Safran, who was appointed interim CIO effective Aug. 1. Safran was previously senior asset manager for TCU’s endowment and was responsible for researching and evaluating investment opportunities. Prior to joining TCU’s endowment team in 2012, he was a senior investment analyst for Texas Capital Bank.

According to a job posting on the university’s website, the CIO reports to TCU Chancellor Victor J. Boschini Jr. and is a member of his cabinet.

“The CIO is responsible for providing executive leadership of the investment function with the goal of optimizing performance returns and driving long-term value creation,” said the posting. The CIO’s mandate includes investment policy, asset allocation, portfolio construction, manager selection, and risk management. The CIO will be responsible and accountable for the overall management of the investment portfolio and leadership of the investment office staff.

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Specific responsibilities include:

  • Defining and implementing the strategic vision for the investment function across all aspects of the investment process;
  • Developing and implementing investment policy, asset allocation strategies, and risk management controls;
  • Sourcing, evaluating, and executing all investment strategies, including the selection and monitoring of external investment managers, and the oversight of all investment activities;
  • Conducting due diligence on prospective opportunities, including qualitative and quantitative analysis of investment strategy, risk, process, organization, portfolio positions, and performance;
  • Evaluating and negotiating management fees and investment guidelines with fund managers;
  • Using data, technology, and reporting systems to ensure effective monitoring of and reporting on investment positions and performance; and
  • Acting as a liaison for assets held in trust by others in which TCU has beneficial interests.

The CIO, who will need at least 10 years of experience as a senior investor on an institutional asset management platform, will also be tasked with reporting to TCU’s chancellor, chief financial officer (CFO), and board of trustees about investment results, investment strategies, and changes in the portfolio, and will also be responsible for attracting, developing, and retaining investment talent.

Additional qualifications include a proven investment track record and a reputation for sound investment judgment and risk management investing across multiple asset classes, including private equity. The posting also noted that while direct private equity investing is not requisite, it “is highly relevant.”

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