How a Weakening U.S. Dollar Reshapes Global Wood Market
As the U.S. dollar softens against the euro and Canadian dollar, timber trade dynamics are shifting fast. This post explores how currency fluctuations are affecting timber pricing, sourcing decisions, and export competitiveness in 2025.
How USD is Performing vs. EUR and CAD
USD vs EUR: The dollar has softened significantly against the euro. For example, year‑to‑date EUR/USD has risen (the euro strengthening vs. USD), which reflects a weaker USD in broader FX markets. In the last six months, the USD has weakened vs EUR: EUR/USD is up about +8.76%.
USD vs CAD: USD/CAD is trading around 1.3770 (i.e. $1 USD buys ~1.3770 CAD). The CAD has weakened somewhat vs USD in recent periods, but the broader trend shows USD losing strength, particularly against other major currencies. Over the past 6 months, average USD/CAD ~ 1.3826 CAD per USD. In September 2023, USD/CAD averaged around 1.35 CAD per USD.
Drivers: Expectations of Fed rate cuts, mixed US macro data, and stronger EU policy divergence have contributed to USD weakness. Meanwhile, CAD is exposed to commodity price swings (especially oil) and trade balances which also feed into its relative strength/weakness.
How a Weakening USD Impacts Timber Markets
Exporter Advantage & Importer Cost Shifts
US timber becomes more competitive abroad: As USD weakens, buyers in Europe, Asia, and MENA pay fewer of their home‐currency units for US‑origin softwoods.
Higher pricing: For Canadian and European sawmills operating in CAD and EUR, a weakening U.S. dollar means they receive fewer home-currency units when prices are converted from USD. This erodes margins, potentially leading mills to scale back production due to lower profitability.
Local importers whose currency is tied to a weakening US dollar might benefit: Stronger Local Currency = Cheaper Imports. When a country's currency strengthens against the U.S. dollar, importing timber priced in USD becomes more affordable in local terms. However, for U.S. importers buying from Europe or Canada, a weaker dollar means they need more USD to purchase the same volume of EUR- or CAD-priced timber—raising import costs.
2. Price Pressure, Supply Shifts & Risk
Rising demand for non‑USD origins: As USD weakens, European sawn timber may adjust their pricing upward.
Freight, fuel, and logistics costs generally denominated in USD may push imported timber costs up in non‑USD markets, even if the product cost is stable.
Inflation & speculator behavior: Currency shifts often cause speculators to anticipate higher timber prices, or hedge in advance, adding volatility.
3. Sourcing Strategy & Contracting
Locking in prices earlier becomes more attractive, especially for buyers who expect USD to weaken further—so that they don’t face higher USD‑denominated costs later.
Origin diversification
Flexible grade & specification acceptance: Buyers may accept sub‑premium grades or mixed lengths, or adjust specifications, to offset the cost impacts of transport, currency, and duty pressures.
Key Takeaways
The weakening U.S. dollar—particularly against the euro and Canadian dollar—is driving up market prices in major timber-producing regions like Canada and Europe. As export competitiveness increases for North American suppliers, non-USD origin producers face mounting cost pressure. To navigate this volatility, buyers should implement FX hedging strategies with their banks, secure pricing contracts early, and diversify sourcing to protect margins and maintain supply continuity. FX hedging strategies — such as forward contracts or swaps — can help buyers stabilize landed costs and protect against currency-driven volatility. #TimberTrade #Currency #WoodIndustryInsights ##USDImpact #GlobalLumberPrices