Food & Fiber » Lumber Futures

Our user-friendly trading platform and exceptional customer service make trading lumber futures easy and convenient, and our low commissions won't cut into your profits. Open an account to trade futures at optionsXpress.

Symbol
LB
Exchange
CME
Contract Size
110,000 BRD FT
Tick Size
0.10 = $11.00

About CME Lumber Futures

In recent years, lumber prices have reacted to supply and demand imbalances with frequent and often extreme changes. Domestic lumber supplies have been constrained due to mill closings, the spotted owl controversy, and other environmental concerns. In Canada, lumber supplies have been limited as provinces move toward sustainable yields, where only enough trees can be harvested as can be replaced in 40 or 50 years. And on the demand side, due in part to economic conditions and interest rate policies, housing starts over the past decade have ranged from record highs to 36-year-lows.

Highly volatile lumber prices can mean opportunity for large profits. But in an industry like lumber, where costs are high and margins are tight, volatile prices also can mean risk of devastating losses. In 1969, the Chicago Mercantile Exchange became the first exchange to offer price protection to the forest products industry with the listing of random length lumber futures contracts.

The lumber futures contract traded at the CME calls for on-track mill delivery of random length 8-20 ft. nominal 2 x 4s. Primarily, the deliverable species is Western Spruce-Pine-Fir, although other Western species - such as Hem-fir, Englemann Spruce, Alpine Fir, and Lodgepole Pine - may also be delivered. Mills must be located in the states of Oregon, Washington, Idaho, Wyoming, Montana, Nevada or California, or the Canadian provinces of British Columbia or Alberta. The acceptable grades are Standard and Better, or #1 and #2 of the structural light framing category; or construction and standard of the light framing category. Grade #2 or standard grade may not exceed 50% of the lumber delivered. Wood must be kiln dried to a moisture level of 19 percent. The random-length tally must conform to size percentage limits. Lumber of each length, for the most part, must be banded together, poly or paper wrapped and loaded on one 73' flatcar.

optionsXpress offers trading in CME lumber futures. We give firms engaged in producing, processing, marketing, or using lumber products - from lumber mills to home builders - the ability to hedge against adverse price swings by taking positions in the lumber futures market. Usually, but not always, hedgers transfer unwanted price risk to speculators. Speculators are investors who hope to achieve profits by buying lumber futures when they think prices will rise, or by selling lumber futures when they think prices will fall.

CME Lumber Futures Specifications

Lumber futures, Chicago Mercantile Exchange, trading symbol LB. The contract size is 110,000 brd. ft. The minimum tick size is $0.10 per 1,000 brd. ft., worth $11 per contract.

Trade electronically on Globex from 6:00 PM US EST until 5:00 PM US EST.

Principal trading months for lumber futures include January, March, May, July, September, and November.

Please see the disclosures page for additional information regarding this section.