Price spikes like these trigger mega-profits for producers, and they’re trying to maximize their profits by ramping up production, and thereby supply. And eventually, supply meets demand and then exceeds demand, and then supply keeps piling up everywhere because producers are still making hay while the sun shines and they’re producing more and more supply.
And that’s how these price spikes are eventually resolved: They produce a glut, and at least part of that WTF price spike collapses.
This unwinding of the price spike could start to happen soon, or the price could continue to spike, and the unwind could take months or much longer. And even if part of the price spike collapses, prices could remain high compared to prior years.Lumber: Scary-Crazy Inflation Now Gets Passed On. But These WTF Price Spikes Cannot Last | Wolf Street