A recursive dynamic spatial equilibrium model is used to examine the global competitiveness of Canadian softwood lumber. To address the restrictive assumption of softwood lumber homogeneity, this study disaggregates softwood lumber into two product groups: (i) higher grade lumber that includes appearance, select structural-grade lumber, and Japanese J-grade lumber; and (ii) lower grade lumber that includes the United States dimension lumber that is commonly used in construction and utility- and economy-grade lumber. Factors that may affect global softwood lumber markets are simulated in the model to project global softwood lumber trade flows from 2012 to 2021. The results indicate that the reduced lumber supply in western Canada caused by the mountain pine beetle (Dendroctonus ponderosae Hopkins) infestation combined with demand increases in several regions of the world will contribute to a global increase in softwood lumber prices. Our results suggest that the global price increase will be greater for lower grade softwood lumber than for higher grade lumber. The United States and China will continue to be the top two markets for lower grade Canadian softwood lumber. Although Canadian exports of lower grade softwood lumber to the United States are expected to increase marginally over time in response to the recovery of American housing starts, softwood lumber exports to China are expected to drop significantly, and it is forecasted that exports from the Russian Federation will fill that void. These findings provide strong market signals for both forest managers and the forest-products industry to assess supply chain profitability and adjust production planning accordingly.