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Copper Futures Rally Amid Commodity Index Reweighting

Strategic Insights

— 1 min read

Commodity index reweighting provided short-term support for copper futures, but economists remain cautious due to lingering economic concerns. The March copper contract on the Comex division of the New York Mercantile Exchange rose 12.4 cents, or nearly 8.5%, to settle at $1.5830 per pound, its highest point in over a month. Market participants are buying ahead of the reweighting of the Dow Jones-AIG Commodity Index fund, with some aiming to get in the market before the index rebalancing takes effect next week.

Key Takeaways:

  • Copper futures rallied 12.4 cents, or nearly 8.5%, to settle at $1.5830 per pound on Comex due to buying ahead of commodity index reweighting.
  • The Dow Jones-AIG Commodity Index fund will rebalance its copper holdings from 7.04% to 7.31% of the index's makeup, requiring index funds to buy more contracts in January.
  • Some participants may be attempting to get in the market ahead of the index rebalancing, which is expected to hit in force next week.
  • Copper inventories in London Metal Exchange warehouses rose 1,450 metric tons on Tuesday, leaving them at 343,500.
  • The most recent Comex inventory data showed a 65 short ton increase to 34,579 short tons.

Statistics:

  • March copper rose 12.4 cents, or nearly 8.5%, to settle at $1.5830 per pound on the Comex division of the New York Mercantile Exchange.
  • Copper inventories in London Metal Exchange warehouses rose 1,450 metric tons on Tuesday.
  • The Dow Jones-AIG Commodity Index fund will rebalance its copper holdings from 7.04% to 7.31% of the index's makeup in January.

Sources:

  • Dow Jones Commodities News via Comtex
  • Triland Metals research note
  • Infinity Futures
  • JP Morgan research report
  • FuturesOne
  • Comtex
  • Dow Jones Newswires; 201-938-5959; matt.whittaker@dowjones.com

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