COMMODITIES : Copper Plunges After Peru Strike Is Settled

Copper futures prices plunged in frantic selling Tuesday on New York’s Commodity Exchange in reaction to the settlement of a 57-day mining strike in Peru, the world’s sixth-largest copper producer.

On other markets, precious metals edged lower; cotton futures were sharply lower; energy futures declined; grains and soybeans were mixed; livestock and meat were mixed, and stock index futures gained.

Reports of an overnight settlement in the Peruvian mining strike surprised traders on the Commodity Exchange, where copper futures prices had been expected to stabilize following a selloff Monday.

“It came as a shock,” said Bernard Savaiko, metals analyst with Paine Webber Inc. in New York.

Copper settled 6 cents to 7 cents lower, with the spot contract for delivery in December at $1.52 a pound and the most actively traded March contract at $1.29 a pound.

The strike, which began Oct. 17, was a major factor in copper’s run up to a record $1.6475 a pound on the Commodity Exchange last week. Analysts said the shutdown, along with a shorter strike during August, may have cost Peru up to 100,000 metric tons of copper production and could reduce 1988 Peruvian exports of copper by 30%, compared to 1987.

Supplies Remain Tight

Even with the end of the strike, it will take Peruvian mining companies at least a month to resume full production and another six to eight weeks before the first shipments reach fabricators to be made into copper wire and other forms for industrial use.

“You’re going to have the supply tightness continuing for a while but during the holiday period you’re not likely to get rising physical demand, as fabricators are not that active,” said Bette Raptopoulos, an analyst with Prudential-Bache Securities Inc. in New York.

“The key question,” said Savaiko, “is whether or not there will be adequate supplies to meet demand during the peak consumption period of the first quarter of the year.”

James Steel, an analyst with Refco Inc. in New York, noted that production problems still plague many other copper-producing countries. He said copper’s price “could fall further in the next day or two, purely because there’s a technical run on the downside now.”

Gold and silver futures settled marginally lower on the Commodity Exchange.

Gold settled 30 cents to 40 cents lower, with February at $424.10 an ounce; silver was 0.10 cent to 0.70 cent lower, with March at $6.295 an ounce.

Energy Futures Retreat

Cotton futures fell sharply on the New York Cotton Exchange in a mostly technical selloff triggered by the Agriculture Department’s 2.4% upward revision Monday of its 1988-89 U.S. cotton production estimate.

“I would say the whole thing was due not to cotton fundamentals but to the charts,” said Ed Whitten, an analyst with Balfour Maclaine Corp. in New York. “The crop report may be going to get some credit but that was just the icing on the cake.”

Cotton settled 1.28 cents to 1.64 cents lower, with March at 57.55 cents a pound.

Heating oil futures fell sharply on the New York Mercantile Exchange following Monday’s strong rally. Crude oil and gasoline futures also retreated.

Corn futures ended strongly higher on the Chicago Board of Trade on hopes for new export sales while soybean prices fell and wheat finished mixed.

Livestock and meat futures finished narrowly mixed on the Chicago Mercantile Exchange following sharp gains in the two previous sessions.

Stock index futures advanced modestly on the Chicago Mercantile Exchange, where the contract for March delivery of Standard & Poor’s 500 index settled 0.30 point higher at 279.60. Each point is worth $500.