Copper Conundrum
It's stopped falling, but isn't apt to rally
interactive.wsj.com
By David Bogoslaw
Two weeks ago, copper prices on the Comex division of the New York Mercantile Exchange rallied nearly three cents a pound in two days from September contract lows to 69.10 cents. But the gains were dismissed as primarily technical in nature, based on penetration of key price levels at the London Metals Exchange, where 90% of the world's copper is traded. The fact that its sister metals at the LME, nickel and aluminum, had rallied earlier that week bolstered the view that copper wasn't rising on the strength of its own fundamentals.
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Standard Bank's Bhar adds: "The reason we haven't seen production cuts is because copper producers have been bailed out by their own weak currencies." Today's copper price, he noted, "translated into [Chilean] pesos or Aussie dollars, is a good 20%-40% higher than the dollar price. When translated into dollar revenue, they're actually getting more, which is helping them to weather low copper prices."
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Merrill Lynch senior futures strategist Bill O'Neill projects that "a meaningful demand-led recovery" won't develop until the second quarter of next year.
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Soybean futures fell nearly 5% last week to post their lowest close since early July, settling Friday at $4.785 a bushel for November delivery, in response to ample rains across the Midwest Corn Belt. Traders had hoped the crop could rebound from stress it suffered earlier this spring and summer. Soybeans reach maturity later in the summer than corn, and still have a chance to add pods even at this time of year, analysts say. Corn, on the other hand, held its ground at the CBOT this week. Most traders think it's too late for these rains to help the corn crop, and believe the USDA will project six-year low production in its September 12 monthly crop report. |
