Timber ETFs: 5 Ways the Demand Picture is Shifting | ETF Trends

Economies around the world are stirring and they require basic materials to get them moving. Copper and steel are in demand, but timber exchange traded funds (ETFs) also stand to gain from the rebuilding efforts.

Some factors in favor of timber’s outlook include:

  • The U.N. Economic Commission for Europe projected a surge in Chinese-led demand for timber next year. Production capacity has also tanked since many plants have closed during the recession. With capacity diminished, timber prices may continue to rise as demand increases and supply remains low.
  • Chinese President Hu Jintao expressed China’s interest in Malaysia’s palm oil and timber sectors as the two parties  signed trade agreements, according to AFP.
  • Malaysian Prime Minister Najib Razak said that China “has an insatiable demand for natural resources to fuel its economic expansion.”
  • U.S. homebuilders received a lift yesterday as Toll Brothers (NYSE: TOL) reported that demand for new homes is increasing. The luxury builder said that contracts for new homes rose 42% in the fiscal fourth quarter, according to the Associated Press.

Najib also noted that President Hu remarked about China’s intention to increase the amount of trade with respect to palm oil and Malaysian timber. (Accessing the global recovery with timber ETFs).

For more information on the timber industry, visit our timber category.

  • Claymore/Beacon Global Timber Index (NYSEArca: CUT): up 46.5% year-to-date


  • iShares S&P Global Timber & Forestry Idx (NasdaqGM: WOOD): up 27.7% year-to-date


Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.