Copper hits record as markets rally in thin trade
The commodities rally going into the New Year showed no signs of slowing on Tuesday, with copper hitting its second record high in as many days and most markets rising in thin trading amid seasonal holidays.
The 19-commodity Reuters-Jefferies CRB index settled at its highest level since October 2008 after oil, soybean and wheat prices reached peaks seen around the same period. Raw sugar raced to a 30-year high.
Trading was light, with the combined energy, metals and agricultural complex churning out a third of the volume averaged over a 30-day period.
That led some to dispute the strength of the rally in commodities over the past fortnight as traders and investors took off for seasonal holidays, causing volumes to dwindle.
The CRB has risen 3.5 percent in the past two weeks alone, and is up 17 percent for the year.
“We’re making highs on extremely thin volume,” said Sean McGillivray, head of asset allocation for Great Pacific Wealth Management in Oregon.
In the copper market, he said it was hard to accept the latest peaks set by the industrial metal unless it was “validated with volume.”
US copper futures’ benchmark fourth-month contract, March, settled up just over 1 percent at $4.3280 per lb in New York after setting a record high of $4.3350. On Monday, the contract hit an all-time peak of $4.2985.
For the year, US copper is up nearly 30 percent.
Tuesday’s rally in copper coincided with a weaker dollar, a factor that almost always boosts commodities priced in the currency. The dollar fell to a record low against the Swiss franc and plumbed a 6-1/2 week bottom against the yen, although it rose against the euro on renewed worries on euro zone debt.
Even so, the run up in copper — regarded as a better economic indicator than most commodities — came amid a drop in latest readings for US consumer confidence and home prices. Weekly US jobless claims data are up next, on Thursday.
Some said copper, used in power and construction, was rallying on inflationary and supply threats. These market watchers expected newer highs in prices.
“I see a possible top of $4.40 to $4.45 next week,” Zachary Oxman, managing director at Trendmax Futures in Encinitas, California, said, in his projection for March copper.
“This is a market riding on all the inflation promised by the Fed and the inexorable buying likely to come out of China, despite what China does to its interest rates.”
Copper and many other commodities have risen since September, coinciding with a wider rally on Wall Street and world equities, after the Federal Reserve came up with a $600 billion bond buying program to stimulate US growth.
China — the No. 1 consumer of base metals such as copper and the largest economy after the United States — made little impact on commodity markets at the weekend with its second interest rate hike in just over two months. Beijing raised its main one-year lending and deposit rates by 25 basis points in an attempt to temper inflation.
US crude oil’s benchmark front-month contract, February, settled up half a percent at $91.47 a barrel, a day after touching $91.88, its highest since in 26 months. For the year, US crude is up 15 percent.
Gold’s most-active futures contract in New York, February, finished up 1.7 percent at $1,405.60 per ounce, nearing a record high of $1,432.50 from earlier in the month. For the year, New York gold is up almost 27 percent.
In wheat, US futures for March ended Chicago trade up 2.3 percent at $7.98-1/4 a bushel. The contract hit $8.02 during the session, its highest in five months. For the year, Chicago wheat is up 47 percent.
In raw sugar, New York’s March contract climbed 0.8 cent to end at a 30-year peak at 34.39 cents per lb on trade and speculative buying. For the year, the market is up 28 percent.
The 19-commodity Reuters-Jefferies CRB index settled at its highest level since October 2008 after oil, soybean and wheat prices reached peaks seen around the same period. Raw sugar raced to a 30-year high.
Trading was light, with the combined energy, metals and agricultural complex churning out a third of the volume averaged over a 30-day period.
That led some to dispute the strength of the rally in commodities over the past fortnight as traders and investors took off for seasonal holidays, causing volumes to dwindle.
The CRB has risen 3.5 percent in the past two weeks alone, and is up 17 percent for the year.
“We’re making highs on extremely thin volume,” said Sean McGillivray, head of asset allocation for Great Pacific Wealth Management in Oregon.
In the copper market, he said it was hard to accept the latest peaks set by the industrial metal unless it was “validated with volume.”
US copper futures’ benchmark fourth-month contract, March, settled up just over 1 percent at $4.3280 per lb in New York after setting a record high of $4.3350. On Monday, the contract hit an all-time peak of $4.2985.
For the year, US copper is up nearly 30 percent.
Tuesday’s rally in copper coincided with a weaker dollar, a factor that almost always boosts commodities priced in the currency. The dollar fell to a record low against the Swiss franc and plumbed a 6-1/2 week bottom against the yen, although it rose against the euro on renewed worries on euro zone debt.
Even so, the run up in copper — regarded as a better economic indicator than most commodities — came amid a drop in latest readings for US consumer confidence and home prices. Weekly US jobless claims data are up next, on Thursday.
Some said copper, used in power and construction, was rallying on inflationary and supply threats. These market watchers expected newer highs in prices.
“I see a possible top of $4.40 to $4.45 next week,” Zachary Oxman, managing director at Trendmax Futures in Encinitas, California, said, in his projection for March copper.
“This is a market riding on all the inflation promised by the Fed and the inexorable buying likely to come out of China, despite what China does to its interest rates.”
Copper and many other commodities have risen since September, coinciding with a wider rally on Wall Street and world equities, after the Federal Reserve came up with a $600 billion bond buying program to stimulate US growth.
China — the No. 1 consumer of base metals such as copper and the largest economy after the United States — made little impact on commodity markets at the weekend with its second interest rate hike in just over two months. Beijing raised its main one-year lending and deposit rates by 25 basis points in an attempt to temper inflation.
US crude oil’s benchmark front-month contract, February, settled up half a percent at $91.47 a barrel, a day after touching $91.88, its highest since in 26 months. For the year, US crude is up 15 percent.
Gold’s most-active futures contract in New York, February, finished up 1.7 percent at $1,405.60 per ounce, nearing a record high of $1,432.50 from earlier in the month. For the year, New York gold is up almost 27 percent.
In wheat, US futures for March ended Chicago trade up 2.3 percent at $7.98-1/4 a bushel. The contract hit $8.02 during the session, its highest in five months. For the year, Chicago wheat is up 47 percent.
In raw sugar, New York’s March contract climbed 0.8 cent to end at a 30-year peak at 34.39 cents per lb on trade and speculative buying. For the year, the market is up 28 percent.
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