COMMODITIES : Copper Plunges While Oil Is Up in Wake of Declines
Copper futures prices dropped steeply on Monday, punctuating a weeks-long decline following reports that an increase in inventories at the London Mercantile Exchange was two or three times larger than traders had anticipated.
On other markets, crude oil futures climbed higher despite rumblings of increased production by both Iran and the United Arab Emirates; grain and soybean futures prices slipped lower after favorable weather swept the South American growing regions of Argentina and Brazil over the weekend, and gold dipped slightly as traders anticipated the Federal Reserve Board might nudge interest rates higher to fight inflation.
On Monday, copper futures settled 1.6 cents to 5.45 cents lower on the New York Commodity Exchange, with the contract for delivery in March at $1.2825 a pound.
The spot March contract for copper futures peaked at $1.5190 a pound nearly 4 weeks ago and has declined steadily since as supply tightness has eased and labor problems in the key producing nations of Chile and Peru have been resolved.
“Anytime inventories rise, it’s bad news. But the trade was looking for a rise in stocks of between 1,000 and 3,000 tons at the LME, and what they saw was somewhere in the neighborhood of 7,300 instead,” said John O’Connell of Refco Inc. “That put some downside pressure on the market.”
Crude oil futures rose in the wake of a big decline late last week, but traders said there was little news to explain the run-up.
“There’s really no news and the vague blurbs we did here--that Iran was increasing production, that the UAE would be above quota next month--both were actually bearish,” said Jim Ritterbusch, vice president-trading and research for Carson Petroleum Co. in Chicago.
“I think most of the buying today might have come because the market didn’t break,” he said. “And it points up that we’re in a choppy, sideways market, casting around for some real news.”
Crude oil settled 21 cents to 48 cents higher on the New York Mercantile Exchange, with March at $17.59 a barrel; heating oil was .81 cent to .86 cent higher, with March at 48.17 cents a gallon; and unleaded gasoline was unchanged to .58 cent higher, with March at 48.15 cents a gallon.
Grain and soybean futures prices came under pressure from the opening bell at the Chicago Board of Trade and never recovered. Dale Gustafson of Drexel Burnham Lambert Inc. said reports of rain in South America helped depress prices.
Without any significant export business announcements, prices in the wheat and corn pits slid lower in sympathy.
Wheat settled 2 cents to 4 cents lower, with the contract for delivery in March at $4.25 1/4 a bushel; corn was 3/4 cent to 1 1/4 cents lower, with March at $2.65 1/4 a bushel; oats were 1 1/4 cents to 2 3/4 cents lower, with March at $2.04 1/4 a bushel, and soybeans were 7 cents to 12 cents lower, with March at $7.24 a bushel.
Gold futures continued trending lower, although silver and platinum posted moderate gains.
Gold settled $2 to $2.60 lower on the Comex, with February at $386.20 a troy ounce; silver rose 1.1 cent to 1.5 cents, with February at $5.826 a troy ounce. Platinum was 80 cents to $1.70 cents higher at the New York Mercantile Exchange, with March at $525.80 a troy ounce.
Livestock futures were mixed to mostly higher, while pork futures were mixed to mostly lower at the Chicago Mercantile Exchange.
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