Southern loggers are pushing wood production to a 13-year high. So why is the price of lumber up 288%? - Fraser Wood Elements - Fredericksburg Virginia - American Leather, Fraser Made Gifts & Accessories, Custom Work

BY LANCE LAMBERT
June 10, 2021 5:48 PM EDT

Exorbitant lumber prices mean money, in a sense, does grow on trees. It’s why loggers are racing to cut down more Southern yellow pine—a plentiful species that dots the Deep South. On Tuesday, British Columbia–based lumber giant Canfor announced its plan to invest $160 million to build its first-ever sawmill in Louisiana. That comes after BC-based West Fraser Timber announced in May that it will spend $150 million to expand five sawmills in the South. Interfor, another BC-based lumber producer, is also in the midst of expanding some of its Georgia sawmills.

While new sawmills won’t churn out two-by-fours anytime soon, increased production at existing mills is already pushing wood production in the U.S. to a 13-year high. In April, the U.S. industrial wood production index hit 134.2, its highest level since the 135.3 struck in December 2007—the first month of the Great Recession, after which homebuilding and lumber production screeched to a halt.

This increase in wood production looks like simple economics at work: With lumber at historic prices, producers should be incentivized to boost supply while buyers presumably would rethink purchasing at those levels. Except this uptick in wood production hasn’t coincided with a reversal to pre-pandemic lumber prices. On Tuesday, the cash price per thousand board feet of lumber was at $1,391, according to industry trade publication Random Lengths. While that’s down a bit from its $1,515 all-time high set on May 28, it’s up a staggering 288% since April 2020. Prior to the pandemic, the price usually floated between $350 and $500.

READ MORE AT FORTUNE.COM