Basics on the lumber commodity and its futures

The Random Length Lumber futures trades at the Chicago Merchantile Exchange (CME) which is part of the CME Group. The futures’ ticker symbol is ‘LB’ for Lumber.
Contract size is 110.000 board feet with expiries every second month starting in January (January+2).
The board foot is a measure of volume matching a 1 inch thick, square board of 1 foot length and width (= 2.36 liters). One contract is therefore equivalent to 259.600 liters or 259.6 cubic meters, filling a cube of 6.4m lengths, height and depth.
The lumbers’ length is allowed to randomly vary within a range of 8 to 20 feet (= 2.4m to 6.1m). But height and width is specified to be 2 x 4 inches.
Price quotation is USD per 1000 board feet (1 mbf). That leverages the futures contract to a factor of 110 (= 110.000 board feet / 1000 board feet).
Maximum daily price movement is USD 10 above or below the previous day’s settlement price, but can be subsequently extended to USD 15.
The futures’ final settlement is by physical delivery of lumber manufactured in selected Western States of the U.S. or the Canadian States of Alberta or British Columbia.


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