Speculators Shun Copper - May 16th

Speculators Shun Copper

May 16^th, 2011

Last month I wrote about the copper market, noting that it looked top heavy and I examined some changes taking place in China that could contribute to a slide [Copper(Top) Heavy – April 18^th].  The last two weeks have seen the selloff intensify, along with many other commodities, and Friday’s CFTC Commitment of Traders report revealed that speculators are quickly turning their backs on the copper market.

CFTC Large Non-Commercial Traders vs. Price

Courtesy of Bloomberg

The speculative community has held a large net long position since last summer, and over the past few weeks have been liquidating their positions en masse.  Open interest has been declining steadily as well, indicating reduced speculative participation in the market.  While there are many factors in determining the market price of copper, this is yet another strike against the red metal. 

-Jaime Macrae, CIM

Account Executive, Friedberg Mercantile Group

jmacrae@friedberg.ca