COMMODITIES : Fear of Shortage Bolsters Copper; Other Metals Slip

Waves of panic buying sent copper futures soaring Tuesday on New York’s Commodity Exchange amid fears that supplies were drying up.

In other markets, precious metals closed slightly lower; frozen pork bellies soared while livestock futures posted modest gains; grain and soybean futures advanced; energy futures gained, and stock index futures retreated.

With industrial demand for copper up as much as 8% from a year ago and warehouse inventories at their lowest levels in 13 years, traders were desperate to secure contracts for future delivery of the metal, analysts said.

“Panic gripped the market today,” said Bernard Savakl, an analyst in New York with Paine Webber Inc. “It seemed like spontaneous combustion.”

Savakl said traders were worried not only about the price going higher but also about future availability of the metal at any price.

“Scrap as well as refined supplies have been drying up in recent months,” he said. “And it looks like industrial off-take (usage) will remain strong through the end of this year into the first quarter of next year.”

After the close, the Comex announced higher margins on copper futures, effective after Wednesday’s close, because of market volatility.

Copper settled 1.8 cents to 7.7 cents higher with the contract for delivery in December at $1.024 a pound.

Also on the Comex, gold and silver futures settled slightly lower as banks and dealers evened up their positions ahead of the Veterans Day bank holiday, Savakl said.

Gold was 80 cents to 90 cents lower, with December at $462.40 an ounce; silver was 0.80 cent to 2.8 cents lower, with December at $6.53 an ounce.

Analysts were puzzled by the unusually strong performance of frozen pork bellies on the Chicago Mercantile Exchange.

“Pork bellies are a world unto their own,” said Charlie Richardson, an analyst in Denver with Lind-Waldock & Co. “They trade on emotion.”

But neither Richardson nor Tom O’Hare of Smith Barney, Harris Upham & Co. in New York could pinpoint strong fundamental factors that led traders to bid the February contract up the 2-cents-a-pound-limit at one point.

Higher cash hog prices supported the hog futures and the bellies, the analysts said, and technical buying may have been responsible for some of the gains.

Cattle futures advanced on improved wholesale and boxed beef trade, which helped lift demand, Richardson said.

Live cattle settled 0.05 cent lower to 0.80 cent higher, with December at 64.42 cents a pound; feeder cattle were 0.02 cent to 0.85 cent higher, with November at 74.35 cents a pound; live hogs were 0.16 cent to 0.70 cent higher, with December at 44.32 cents a pound; frozen pork bellies were 1.55 cents to 1.97 cents higher, with February at 57.42 cents a pound.

Grain and soybean futures closed mostly higher on the Chicago Board of Trade, underpinned by Monday’s monthly crop production report from the Agriculture Department, which projected increased export sales of wheat, corn and soybeans.

The USDA’s announcement that it had targeted the Soviet Union for 2.4 million metric tons of subsidized U.S. wheat added to the optimism in the wheat pit, said Joel Karlin, an analyst in Chicago with Research Department Inc.

After the close, the USDA announced sales of 400,000 metric tons of soybeans and 150,000 metric tons of soybean meal to the Soviet Union. Anticipation of those sales had boosted the soybean complex.

Wheat settled 1.75 cents to 2.75 cents higher, with December at $2.8725 a bushel; corn was 1 cent lower to 1.75 cents higher, with December at $1.815 a bushel; oats were 2 cents to 4 cents higher, with December at $1.87 a bushel; soybeans were 1.75 cents to 5.5 cents higher, with November at $5.4925 a bushel.

Energy futures advanced on the New York Mercantile Exchange on expectations that Tuesday’s weekly American Petroleum Institute report would show a decline in stocks of refined oil products, analysts said.

The figures, released after the close, showed crude oil stocks up nearly 4.2 million barrels from a week earlier; heating oil stocks down about 2.8 million barrels and unleaded gasoline stocks down about 1 million barrels.

West Texas Intermediate crude oil settled 20 cents to 31 cents higher, with December at $18.94 a barrel; heating oil was 0.90 cent to 1.07 cents higher, with December at 55.85 cents a gallon; unleaded gasoline was 0.62 cent to 0.80 cent higher, with December at 50.70 cents a gallon.

Stock index futures settled sharply lower on the Chicago Mercantile Exchange.

The contract for December delivery of the Standard & Poor’s 500 stock index was 6.20 points lower at 239.40, compared to the underlying equity index’s settlement at 239 points.

Tables, Page 12