COMMODITIES : Copper Futures Slide Extends to 3rd Day
Copper futures prices fell for the third straight day Wednesday on indications of increasing supplies and concerns about higher interest rates.
On other markets, precious metals also retreated; livestock and meat futures advanced; energy futures slipped lower; grains and soybeans were mixed, and stock index futures gained.
Copper futures on New York’s Commodity Exchange were primed for a sharp drop from a technical standpoint, and several bearish fundamental factors gave the market a downward shove, analysts said.
The first was a report Tuesday that the U.S. Mint had been offered 4,500 tons of copper at a price only 2.5 cents above the May futures price, which settled Wednesday at 92.2 cents a pound. Copper for immediate delivery has recently been selling anywhere from 3 cents to 6 cents above futures prices.
The second bearish factor was a report that Chile’s state-owned National Mining Co. was selling on the open market copper that had been earmarked for export to Brazil, said Bette Raptopoulos, metals analyst for Prudential-Bache Securities Inc. in New York.
The copper was available because the Brazilian government refused to issue import permits as part of its effort to correct a trade imbalance, she said.
Additionally, industry reports indicated U.S. copper mine production rose 21% in January and February from the same period a year ago, and worldwide production increased 13% in January, said Fred Demler, metals analyst in New York for Drexel Burnham Lambert Inc.
Raptopoulos also cited persistent fears that the Federal Reserve will tighten the U.S. money supply, thereby raising interest rates, “which would impact adversely on copper-consuming industries such as housing and autos.”
But Demler cautioned that demand for copper remains strong and producer stocks are relatively low at 47,000 tons.
Precious Metals Drop
“This is a short-term softening in the supply-demand balance, going from a very tight situation to a short-term surplus market,” he said. “A change in producer stocks of 20,000 or 30,000 tons either way could cause a price spike or a sharp price drop.”
Gold and silver futures fell in reaction to the government’s report that consumer prices rose 0.5% in March. The increase was less than the market had expected, Raptopoulos said.
Gold settled $1.40 to $2.20 lower, with the contract for delivery in June at $459 an ounce; silver was 1.2 cents to 1.5 cents lower, with May at $6.45 an ounce.
Pork futures advanced on the Chicago Mercantile Exchange, with frozen pork bellies up sharply on speculation that cash hog prices are bound to improve in coming months, while cattle futures advanced on higher cash prices, analysts said.
Oil prices continued to slide on the New York Mercantile Exchange amid profit taking and a lack of new developments in the Persian Gulf, analysts said.
West Texas Intermediate crude oil settled 6 cents to 29 cents lower, with May at $17.74 a barrel; heating oil was 0.37 cent to 0.55 cent lower, with May at 49.31 cents a gallon, and unleaded gasoline was 0.27 cent to 0.72 cent lower, with May at 51.42 cents a gallon.
Corn, Soybeans Lower
Corn and soybean futures settled lower--soybeans sharply so--on the Chicago Board of Trade as rain washed away fears about weather damage to crops in the Plains states. Wheat advanced slightly.
Wheat settled 1 cent to 1.75 cents higher, with May at $3.1575 a bushel; corn was 1 cent to 1.25 cents lower, with May at $2.0425 a bushel; oats were 2 cents lower to 0.25 cent higher, with May at $1.665 a bushel, and soybeans were 5.25 cents to 6.50 cents lower, with May at $6.6675 a bushel.
Stock index futures posted slight gains on the Chicago Mercantile Exchange, where the contract for June delivery of the Standard & Poor’s stock index settled 0.60 point higher at 257.90.
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