Copper bulls retreated for a third consecutive week on mounting concern that weaker manufacturing from Europe to China will curb demand even as central banks pledge more stimulus to boost economies.
Thirteen analysts surveyed by Bloomberg said they expect prices to gain next week, 12 were bearish and one was neutral. That’s the lowest proportion of bulls since Aug. 17. They were the most bullish since October at the start of the month.
Copper reached a four-month high Sept. 19 after the Federal Reserve and European Central Bank said they would buy more debt and China, the biggest copper user, approved a $158 billion subways-to-roads construction plan. Data since then signaled contracting factory output in Europe and China and a weaker U.S. economy. International Monetary Fund Managing Director Christine Lagarde said Sept. 24 that global growth may be “a bit weaker” than the Washington-based group forecast in July.
“It will take time for stimulus to impact real demand and globally we still see poor data on many fronts,” said Filip Petersson, an analyst at SEB AB in Stockholm. “The industrial-metal market will have a very hard time recovering without the Chinese downturn being reversed or at least stabilization.”
The metal rose 8.3 percent to $8,230 a metric ton this year on the London Metal Exchange, after advancing 7.1 percent this quarter. The MSCI All-Country World Index of equities gained 11 percent since the start of January and the Standard & Poor’s GSCI gauge of 24 commodities added 2.9 percent. Treasuries returned 2.3 percent, a Bank of America Corp. index shows.
Weakening global growth means the actions taken by central banks probably won’t be a “game changer” for many commodities, Barclays Plc said in a report Sept. 25. Supply will exceed demand by 160,000 tons in the three months through December, the first surplus this year, Barclays predicts.
Preliminary data from HSBC Holdings Plc and Markit Economics on Sept. 20 pointed to an 11th month of manufacturing contraction in China and added to signs the nation’s slowdown is extending into a seventh quarter. Services and output in the 17-nation euro area plunged to a 39-month low in September, a Markit report showed. An index of U.S. leading economic indicators declined for the second time in three months in August, the Conference Board said Sept. 20.
Copper tripled as the Fed bought $2.3 trillion of debt in two rounds of quantitative easing from December 2008 through June 2011. The Fed said Sept. 13 it will buy $40 billion of mortgage debt a month and probably hold the federal funds rate near zero until at least the middle of 2015. The Bank of Japan said last week it will add to a fund that buys assets and the ECB announced an unlimited bond-purchase program Sept. 6.
Hedge funds’ bets on a rally were near the highest in more than five months in the week ended Sept. 18, U.S. Commodity Futures Trading Commission data show. Speculators had wagered on price declines from May to August. This year’s average price of $7,963 is set to be the second-highest ever, after 2011.
Inventories in warehouses monitored by the LME, the largest industrial metals bourse, slumped 41 percent this year and fell to the lowest since October 2008 on Sept. 19, exchange data show. Copper is the metal most likely to benefit from infrastructure spending in China, Macquarie Group Ltd. said at a Sept. 19 press briefing in London.
The S&P GSCI gauge of raw materials entered a bull market as it climbed 24 percent from this year’s lowest close on June 21 through Sept. 14. It’s dropped about 4.3 percent since then. The IMF forecast in July global growth of 3.5 percent this year and 3.9 percent in 2013.
In other commodities, 15 of 30 traders and analysts surveyed by Bloomberg said gold would rise next week and 13 were bearish. Futures on the Comex exchange in New York rose 13 percent to $1,777.50 an ounce since the start of January, extending 11 consecutive annual gains. Holdings in gold-backed exchange-traded products reached a record 2,551.9 tons on Sept. 25, data compiled by Bloomberg show.
Six of 13 people surveyed expect raw sugar to drop next week and five predicted gains. It slid 13 percent to 20.37 cents a pound on ICE Futures U.S. in New York this year.
Fourteen of 27 people surveyed anticipate higher corn prices next week and 13 said the grain will fall, while 15 of 28 said soybeans will increase and 13 expect lower prices. Corn rose 17 percent to $7.5625 a bushel this year as soybeans advanced 32 percent to $15.96 a bushel in Chicago. Both crops surged to records since August as the U.S. endured its worst drought in more than 50 years.
“The significant steps we’ve seen in recent times from a whole variety of countries will in due course help to alleviate the worst fears of hard landings, particularly in China,” said Ross Strachan, a commodities economist at Capital Economics Ltd. in London. “You’ve still very much got the global economy slowing down. Things are likely to get significantly worse for commodity prices.”
Gold survey results: Bullish: 15 Bearish: 13 Hold: 2 Copper survey results: Bullish: 13 Bearish: 12 Hold: 1 Corn survey results: Bullish: 14 Bearish: 13 Hold: 0 Soybean survey results: Bullish: 15 Bearish: 13 Hold: 0 Raw sugar survey results: Bullish: 5 Bearish: 6 Hold: 2 White sugar survey results: Bullish: 5 Bearish: 6 Hold: 2 White sugar premium results: Widen: 2 Narrow: 5 Neutral: 6