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Money managers' net longs in copper lowest since July -LME data

Release time:2015-01-15

Jan 15, 2015 01:52 GMT   Source:Reuters

 

 

Wed, 14 Jan 17:32:00 GMT
  
 
* Net longs cut to 20,538 lots last week
* Copper hit 5-1/2 year low on Wednesday

By Harpreet Bhal

LONDON, Jan 14 (Reuters) - Money managers reduced their net long positions in copper last week to their lowest since the London Metal Exchange (LME) began releasing positioning data in July, reflecting a bearish view even before prices slumped to 5-1/2 year lows this week.

The exchange's latest commitment of traders report (COTR) showed money managers cut net long positions by 374 lots - equivalent to 9,350 tonnes - to 20,538 lots last Friday, the lowest net long position since the data series began last July.

Copper prices tumbled to a 5-1/2 year low of $5,353.25 a tonne on Wednesday, raising expectations that this week's positioning data could show a further erosion of net longs among money managers.

"Its just a very negative commodities environment right now and as a result we're seeing that reflected in positioning which is basically sell, sell, sell," said Gayle Berry, an analyst at Jefferies Bache.

Hefty falls since the beginning of the week puts copper on track for an 8 percent weekly drop -- its biggest in more than three years. It has lost more than 11 percent of its value since the start of the year.

Prices for the metal used in power and construction have been pressured this month by concerns about the outlook for global growth and demand while steep falls in oil prices have reduced appetite for risky assets.

The COTR contains data on open interest in long and short positions in several broad categories, including producers, brokers and speculators.

The LME defines money managers as entities engaged in managing and conducting LME contracts on behalf of underlying clients such as investment fund firms.

"Both the negative momentum and the technical situation suggest that the price slide could continue for the time being. Once prices bottom out, the counter movement could therefore be pronounced," Commerzbank analysts said in a note.

According to broker Marex Spectron, speculative short positions in copper grew by 21,000 lots to 74,000 lots in the week leading up to Jan. 8.

This represented a short of 47 percent of open interest, the largest speculative short in copper since October 2008, Marex said.

Data from the U.S. Commodity Futures Trading Commission

(CFTC) last week showed hedge funds and money managers increased bearish bets in copper contracts during the week to Jan. 6. [ID:nEMN1IRX8K]

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