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Copper Futures Rally on Warehouse Draws and Surging Equities

Strategic Insights

— 1 min read

Copper futures experienced a significant boost on March 10, 2009, driven by warehouse draws, a decline in the US dollar, and surging equity markets. The May copper contract rose 4.5 cents to close at $1.6845 per pound on the Comex division of the New York Mercantile Exchange. The rally was also fueled by a decrease in copper inventories stored in London Metal Exchange warehouses, which fell by 6,675 metric tons to 512,025. Market analysts believe that Chinese government buying programs have been a significant factor in the recent decline in stock levels, but caution that this support may eventually come to an end, leaving copper prices vulnerable.

Key Takeaways:

  • May copper futures rose 4.5 cents to settle at $1.6845 per pound on the Comex division of the New York Mercantile Exchange.
  • Warehouse draws and a lower US dollar contributed to the copper price increase.
  • Inventories of copper stored in London Metal Exchange warehouses fell 6,675 metric tons to 512,025.
  • MF Global analyst Edward Meir attributed the recent decline in stock levels to the Chinese government buying program.
  • Analysts expect copper to be influenced by Chinese stimulus moves and related buying, with some forecasting a price range of $1.50 to $1.75.
  • FuturesOne's Sterling Smith sees copper easily moving to $1.80 if it can break out of its current channel and surmount the next resistance point at $1.75.
  • Infinity Futures' Larry Young expects copper to remain within a $1.50 to $1.75 range, with some upward pressure from Chinese stimulus moves.

Statistics:

  • May copper futures rose 4.5 cents to settle at $1.6845 per pound.
  • Warehouse draws contributed to a 6,675-ton decrease in copper inventories stored in London Metal Exchange warehouses.
  • ICE Futures U.S. dollar index fell by more than 0.83%.
  • The Dow Jones Industrial Average rose 289.04 points to 6,836.09.

Sources:

  • Dow Jones Commodities News via Comtex
  • Comex division of the New York Mercantile Exchange
  • MF Global
  • FuturesOne
  • Infinity Futures
  • Dow Jones Newswires

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