Lumber Commodity

Topics: Chicago Board of Trade, Chicago Mercantile Exchange, Futures contract Pages: 8 (2012 words) Published: April 23, 2014
Running Head: FUTURES: LUMBER COMMODITY

Futures: Lumber Commodity
Phillip McLain
MBA 620 Commodity and Futures Trading
Tyler Hood
Hampton University
12/10/13

Abstract
The lumber commodity is one of many commodities that are traded on the futures stock market. Although it is not the most exciting thing, lumber has a very interesting history on the market. This paper will detail Lumber history as a future, its market place and how its traded, how its price is determined, who buys theses futures and the actual commodity, what move the commodity, and how it relates to the economy.

Futures: Lumber Commodity
There are very many commodities on the futures market. Just to name a few there is silver, corn, wheat, gold, cocoa, sugar, types of livestock, palladium, and any more. In the beginning of the semester, I was unaware that these types of things were traded on the market. Throughout the semester, we were able to choose some of these commodities to trade on the market. They surprisingly work just as companies do in the market. There are certain factors that influence them, certain things fluctuate with the economy – meaning that they go up when the economy goes up and vice versa – and some are impacted by certain events in the everyday issues of the world – for instance if there were a drought or if it were to rain too much, certain commodities would be affected by these issues that we would consider weather issues or everyday things that we could not control. Lumber is one of the commodities that is traded on the futures market. This paper will discuss its history as a future, its market place and how its traded, how its price is determined, who buys theses futures and the actual commodity, what move the commodity, and how it relates to the economy. History

Lumber has a number of uses. It can be used to build houses and buildings, to make paper, and many other things. Lumber itself dates all the way back to the beginning of the earth; trees have always been around. However, lumber the commodity, had its first contract developed by the Chicago Mercantile Exchange in 1969 (Draklon, 2011). The first set standardizations for lumber was created in 1922 by the American Lumber Congress (The new York Journal, 1922). These standardization was created to help control the volatile price swings made by the uncertainty of the market and its consumers (Draklon, 2011). This led to the publication of the American Lumber Standard, published in 1924 (History, n. d. ).   “This standard, now called the American Softwood Lumber Standard, establishes lumber sizes, methodology for assigning design values, nomenclature, inspection and re-inspection procedures, the National Grading Rule, an accreditation program, and other functions and has evolved over the years to keep current with ever-changing needs of consumers, regulators and manufacturers. In 1941, the National Lumber Manufacturers Association (NLMA), now the American Forest and Paper Association (AF&PA), entered into a consent decree with the U. S. District Court.   The consent decree required NLMA to create an impartial agency to oversee the standardization, certification, and accreditation for softwood lumber. In 1953 the Court found that the American Lumber Standard Committee (ALSC), appointed by the Secretary of Commerce, and its independently elected Board of Review (BOR) were impartial bodies appropriate to carry out the decree.   Today the ALSC continues to operate under the consent decree and the Voluntary Product Standard system of the Department of Commerce. In addition to the work carried out in the lumber program, in 1992 the ALSC began a program to monitor the performance of agencies which supervise the pressure treating of lumber by treating plants operating under the American Wood Protection Association (formerly American Wood...

References: Drakoln, N. (2011, November 3). Commodities: Lumber. Retrieved from Investopedia: http://www.investopedia.com/university/commodities/commodities11.asp
History
Lumber. (2013, December 10). Retrieved from Finviz:
http://finviz.com/fut_chart.ashx?t=LB&cot=058643&p=d1
Lumber. (2013, December 10). Retrieved from NASDAQ:
http://www.nasdaq.com/markets/lumber.aspx
Lumber Historical Prices/Charts. (2013, December). Retrieved from Trading Charts: http://futures.tradingcharts.com/historical/LU/2013/0/continuous.html
Random Length Lumber Futures
Lumber Futures Contract Prices
(Lumber, 2013)
(Lumber Historical Prices/Charts, 2013)
Appendix C
(Random Length Lumber Futures, 2013)
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