"In the last few years, it was what we could sell," recalled marketing and sales head Deren, who meets every Monday with Henley, who manages two of the company's plants, and other colleagues to plan the week ahead. "Right now, we can look at maximizing profit."
IFG, North America's 12th biggest lumber producer by capacity, according to figures from the industry consultant Forest Economic Advisors, isn't the only timber company experiencing a renaissance. Since March 2009, when the physical price of lumber hit a low $195, the market has come rocketing back, rising 87 percent to $365 in recent trading, according to the trade publication Random Lengths. This past year alone, physical prices rose 40 percent, and futures prices for lumber rose 49 percent — making lumber the best-performing commodity on the CME.
Lumber's recent performance "has exceeded almost everybody's expectations," said Craig Hamanishi, an analyst at INTL FCStone who counts IFG as a client. "Nobody expected these levels."
The upswing has been driven by a number of factors — added demand from Asia, reduced supply — but perhaps most importantly, improved housing starts, which rose 20 percent through November of last year and have nearly doubled since their bottom. And numerous industry executives and analysts remain bullish, with 57 percent of the physical lumber traders recently polled by Random Lengths predicting continued strong increases in housing starts in 2013.
"Despite all the worries about the fiscal cliff, Europe, the U.S., Middle East, the outlook for wood products is upbeat," said Shawn Church, the publication's editor. "Who knows if all this optimism is misplaced, but it's definitely out there."