Weyerhaeuser: Lumber rally will be brief

Weyerhaeuser Co., North America's largest lumber producer, said the rise in lumber prices this month is unlikely to continue amid slumping U.S. housing construction and new-home sales.

Lumber futures on the Chicago Mercantile Exchange have rallied more than 20 percent since Jan. 29 as U.S. and Canadian producers of the building material announced output reductions that were in addition to cuts announced last year.

"As we look at the economic situation and the market conditions, we don't see an ongoing uplift in lumber prices going forward," Tom Gideon, Weyerhaeuser's executive vice president for forest products, said today on a conference call with investors and analysts.

Weyerhaeuser is among companies that have slashed output to balance supply with demand. The company is operating its lumber and wood-panel mills at about half of their production capacity, Gideon said on the call. Yesterday, Weyerhaeuser said it would close its lumber and veneer mills in Pine Hill, Alabama, affecting 300 workers.

Lumber futures for March delivery rose $1.80, or 1.1 percent, to $167.10 per 1,000 board feet at 11:01 a.m. in Chicago.

Weyerhaeuser said today its fourth-quarter loss widened to $1.21 billion, its biggest ever, from $63 million a year earlier, amid falling demand and weakening prices for building materials and U.S. residential real estate.

Weyerhaeuser fell 65 cents, or 2.4 percent, to $26.71 at 12:03 p.m. in New York Stock Exchange composite trading. The shares dropped 58 percent in the 12 months through yesterday.