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The U.S. economy continued strong in 1999, though by yearend interest rates were starting to rise. It was likely that as the year 2000 progressed, the Federal Reserve would increase rates further to slow the economy and head off any increase in the rate of inflation. Eventually this will result in a slower rate of economic growth. But, as 1999 ended, the higher interest rates had done little to slow the economy. The key sector for lumber is the housing sector and higher interest rates could be expected to slow the rate of housing construction. Housing starts in August 1999 were running at a seasonally adjusted annual rate of 1.676 million units, about unchanged from July 1999, but 4 percent more than in August 1998. Housing starts in the first eight months of 1999 were 5 percent higher than a year earlier. Building permits were also stronger. In line with the increases in housing starts has been the increase in U.S. softwood lumber production. U.S. softwood production in July 1999 was 3.1 billion board feet, down 7 percent from June 1999 and up over 1 percent from the year before. Total shipments of softwood lumber in July 1999 were 3.1 billion board feet which was down 8 percent from the previous month and 7 percent less than a year ago. Looking at production regions, July 1999 production in the Southern Pine Region was 1.44 billion board feet with shipments of 1.46 billion board feet. Production in the West Coast Region in July 1999 was 726 million board feet with Inland Region production of 648 million board feet. The California Redwood Region saw production of 107 million board feet. Other softwood production in July 1999 was 183 million board feet. Maple flooring production in July 1999 was 1.91 million square feet with shipments of 2.46 million square feet. Oak flooring shipments in July 1999 were 34 million board feet. Production of structural panels in July 1999 was 2.5 million square feet which was up slightly from June 1999 but down 2 percent from the year before. Shipments of structural panels in July 1999 were 2.48 million square feet. Softwood lumber production in the January-July 1999 period was 21.7 billion board feet, up 7 percent from the same period in 1998. Southern Pine Region production in the first seven months of 1999 was 10 billion board feet, up 7 percent from the year before. Shipments in the period were 10.1 billion board feet, up 9 percent from the same period of 1998. West Coast Region production in the first seven months of 1999 was 5.1 billion board feet, up 12 percent from the like period of 1998. Shipments in the period were 5.1 billion board feet, up 10 percent from 1998. Inland Region softwood production was 4.5 billion board feet, up 5 percent from the year before while shipments were 4.5 billion board feet, up 6 percent respectively. California Redwood Region softwood production was 759 million board feet, down 9 percent from the same period in 1998 while shipments were 777 million board feet, down 9 percent from the first seven months of 1998. Other softwood production was 1.28 billion board feet, up 7 percent from 1998 while shipments were 1.28 billion board feet, up 8 percent from 1998. Total softwood shipments in the January-July 1999 period were 21.7 billion board feet, up 8 percent from the year before. Maple flooring production in the January-July 1999 period was 13.8 million square feet, down 2 percent from the year before. Maple flooring shipments in the period were 14.2 million square feet, up 3 percent from the year before. Shipments of oak flooring in the January-July 1999 period were 300.3 million square feet, up 23 percent from the year before. Structural panel production in the first seven months of 1999 was 17.2 billion square feet, up 2 percent from 1998. Shipments in the period were 17 billion square feet, down less than 1 percent from 1998. Particle board shipments in the first seven of 1999 were 2.9 billion square feet, up 4 percent from 1998. U.S. imports of softwood lumber in July 1999 were 1.71 billion board feet, up 5 percent from June 1999. In the first seven months of 1999, softwood lumber imports were 11.1 billion board feet or some 2 percent more than in 1998. Imports of softwood lumber from Canada in July 1999 were 1.62 billion board feet or 6 percent more than in June 1999. For January-July 1999, softwood lumber imports from Canada were 10.6 billion board feet, up 1 percent from 1998. Softwood log imports in July 1999 were 17.3 million board feet which was down 29 percent from June 1999. In the first seven months of 1999, softwood log imports were 128 million board feet or some 61 percent higher than the year before. Hardwood lumber imports in July 1999 were almost 60 million board feet, up 1 percent from the previous year. Futures Markets Lumber futures and options are traded on the Chicago Mercantile Exchange (CME).

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Excerpted from the CRB Commodity Yearbook.