Hedge funds reduced their bullish bets on copper futures by the most in five months on concern that China, the world’s largest buyer, may take more steps to restrain its economy.
Hedge funds and money managers cut net-long positions, or wagers on rising prices, by 22 percent to 28,159 futures and options contracts in the week ended Jan. 25, the biggest drop since late August, U.S. Commodity Futures Trading Commission data showed last week.
China’s economic growth accelerated by 9.8 percent in the fourth quarter compared with 9.6 percent in the previous quarter, government data showed on Jan. 20. The expansion fueled speculation that more monetary tightening is imminent. Copper has dropped 2.8 percent since reaching a record $4.498 a pound on Jan. 3.
“Copper got a little bit ahead of itself,” said Brian Hicks, a portfolio manager at U.S. Global Investors Inc. which manages $3 billion in San Antonio. “China is the main driver for the market. Concerns about China tightening prompted some profit-taking.”
Copper futures for March delivery climbed 0.8 percent to close at $4.373 a pound on Jan. 28 on the Comex in New York. The metal jumped 33 percent last year as global inventories declined.
Managed-money positions include hedge funds, commodity pools and commodity-trading advisers. Analysts and investors follow changes in speculator positions because such transactions may reflect an expectation of a change in prices.