Lumber demand cycles are largely due to economic conditions. As housing starts increase, more demand for the forest product creates a scarcity, which causes prices to rise. This will entice more production. Conversely, when demand drops, inventories at the mill level increases. Mills will reduce inventory by accepting lower prices.
Supply can cause cycles.
Give me another reason for a timber price cycle. Another factor that enters in is consumer demand of certain species. These can be very long cycles and may last for 30 years or more. Current furniture and cabinet demands are for oak. This is starting to change, however, to painted cabinets.