COMMODITIES : Copper Price Falls but Supplies Remain Tight
Copper futures prices fell steeply Thursday on New York’s Commodity Exchange as traders took profits after five straight days of gains that had pushed the spot price to a record $1.538 a pound.
Despite the drop, analysts said the bullish trend in copper is likely to continue. In other markets, precious metals also declined; livestock and meat futures were sharply lower; grains and soybeans retreated; energy futures rose, and stock index futures fell. After surging more than 13% in just five days, the copper market turned jittery Thursday and sold off.
The most active contract, for delivery in December, fell 3.1 cents to $1.432. Spot copper settled at $1.50 a pound, 3.5 cents below Wednesday’s settlement.
The heights reached during the past week were simply too much for nervous traders to bear, said George Anagnos, metals analyst with Thomson McKinnon Securities Inc. in New York.
“I think the market is generally skeptical of (December) copper above the $1.45 level and any indication of weakness tends to be exaggerated,” he said.
Bullish Trend
Nevertheless, analysts said, copper supplies remained extremely tight, demand for the metal appeared to be increasing and the 2 1/2-week-old copper miners’ strike in Peru, the world’s seventh-largest copper producer, was being felt beyond the borders of that country.
On Thursday, the Southern Peru Copper Corp. declared a “partial force majeure” on certain shipments to Europe and the United States, meaning the company would be unable to fulfill all of its delivery commitments.
Anagnos predicted that December copper futures would trade in a range from $1.38 to $1.46 before making another upward move. He called the lower end of that range “an eminently good buying opportunity.”
Metals economist Fred Demler of Drexel Burnham Lambert Inc. said it was “prime time to take some profits” after the recent rally. But, he added, “the trend is still up, still bullish. The market just got a little ahead of itself.”
Precious metals futures prices also retreated on the Comex on profit taking, but analysts said the gold and silver markets were displaying resistance to substantial declines.
Gold settled 30 to 60 cents lower, with December at $423.70 an ounce; silver was 8 to 8.1 cents lower, with December at $6.45 an ounce.
On the New York Mercantile Exchange, platinum settled 90 cents to $2.80 lower, with January at $577.70 an ounce.
Soybeans Drift Lower
Livestock and meat futures posted steep losses on the Chicago Mercantile Exchange on a combination of weak fundamental and technical factors, analysts said.
In the cattle market, “the cash market softened, the carcass market was weak, movement of boxed beef was light and at lower money,” said Michael Murphy, livestock and meat analyst with Dean Witter Reynolds Inc. in Chicago.
A heavy selloff in pork futures was almost entirely due to profit taking following recent gains, analysts said.
Live cattle were 0.25 to 0.87 cent lower, with December at 72.75 cents a pound; feeder cattle were 0.25 to 0.58 cent lower, with November at 81.20 cents a pound; hogs were 0.10 to 0.75 cent lower, with December at 41 cents a pound, and frozen pork bellies were 1 cent to 1.70 cents lower, with February at 45.65 cents a pound.
The prices of most grain and soybean futures drifted lower on the Chicago Board of Trade as traders disappointed by the fitful pace of grain sales for export took profits off the latest speculative rally.
But after the close, the USDA announced sales of 535,000 metric tons of soy meal to the Soviet Union and another 540,000 metric tons of soybeans and meal to unknown destinations, which was expected to give the soybean complex a boost on Friday.
Wheat settled 1.75 cents lower to 0.50 cent higher, with December at $4.17 a bushel.
Oil futures prices headed higher in light, choppy trading on the New York Mercantile Exchange.
West Texas Intermediate crude oil settled 8 to 15 cents higher, with December at $13.90 a barrel.
