DJ Comex Copper Review: Profit-Taking Decline In Light Trade
DOW JONES NEWSWIRES
Profit taking sent high-grade copper futures slightly lower in New York on
Monday in an otherwise quiet session, traders said.
Some light selling might have been prompted by increases in London Metal
Exchange and Comex warehouse inventories, although these still remain
historically low. Meanwhile, one analyst added, some traders may be on hold
until they see what the Chinese do around a reported Dec. 21 delivery date for
a large short position on the LME.
The most-active March copper contract settled down 160 points at $2.0130 per
pound on the Comex division of the New York Mercantile Exchange. Nearby
December fell 100 points to $2.1595.
"It's range-bound," said one trader. "We softened in the early part of the
day on a little profit taking, with a little pre-year-end book squaring."
Some of this was by Commodity Trading Advisors, he said.
"It slowed down as the morning wore on," he said. "There was a little bit of
spec buying. The CTAs and funds may have bought and figured the market was
cheap. There as a little bit of trade buying, too. That brought us back to
unchanged.
"But once they were done, they (other traders) saw an opportunity to clear
out more (long) positions. So they started to sell it again. It was active only
because of short-term players looking to square books at the end of the year."
Dan Vaught, futures analyst with A.G. Edwards, suggested the market be in a
"waiting game" the next couple of days until participants see how the situation
unfolds with regard to the reported Dec. 21 commitment date for China's large
short position.
"They want to see if the Chinese have to come in and do a bunch of buying or
if they deliver a bunch," said Vaught. "I think the general opinion is they
have pretty much gotten out from under their commitments for December, either
by buying some back, delivering against some of it and rolling some of those
short positions forward."
Aside from a slightly stronger dollar and softer crude, copper may have been
held back by the most recent exchange copper stocks data, said Vaught. LME
authorities reported early Monday that warehouse inventories rose 500 metric
tons to 75,575 metric tons. This came after the most recent Comex data from
late Friday were up 250 short tons to 3,931.
Resistance for March copper can be expected around the Dec. 12
life-of-contract high of $2.0460, said Vaught. He put initial support in the
area from $2.00 to $1.99, then more support around $1.96. The most recent
Commitments of Traders data, released late Friday, showed that the large
non-commercials (essentially the funds) were net long by 4,659 lots as of last
Tuesday.
Settlements (ranges include overnight and day sessions):
Dec (HGZ05) $2.1595; down 1.00c; Range $2.1575-$2.1750
Mar (HGH06) $2.0130; down 1.60c; Range $2.0110-$2.0320
-By Allen Sykora