Rough cedar requires sanding to accept the opaque finish that paint provides. You'll get the best results when you cover the wood before it's allowed to weather. Applying any finish to wet cedar will likely cause premature failure to the finish. Dry, sanded cedar requires a primer coat to prevent bleed-through staining that can ruin a paint job. An exterior alkyd oil-based primer is recommended for optimum protection.
The best formulation to use to cover your thoroughly dried primer base coat is a good-quality exterior latex paint. Look for a paint that is marked 100 percent acrylic. In combination, this primer and paint can last up to 10 years in most climates. Once the painted surface has deteriorated to the point that recoating is required, you'll need to scrape and sand the wood before you can reapply the primer and paint.
If you decide to stain rather than paint your cedar, no primer coat is required. Stain is available in a variety of colors and may be obtained in either semitransparent or solid color formulations. Semitransparent stain exposes more of the natural wood grain if you prefer the unfinished but colored look. The Western Red Cedar Lumber Association discourages the use of solid color stain on outdoor furniture, as the formulation tends to leave a surface film that does not wear well. Stains typically last approximately one to three years between applications.
Transparent finishes are not recommended for use on exterior cedar applications. Shellac, urethane, varnish and lacquer produce stiff finishes that tend to crack or blister. The clear coatings allow ultraviolet light to penetrate the surface and reach the wood beneath. Wood is degraded by exposure to the sun's ultraviolet rays. Transparent coatings are fine for indoor furniture unless they will be located in sunrooms or solariums.