Copper Futures Higher on Chinese Demand, Light Trading

November 23, 2016 7:22AM CST

Commodities futures markets are mostly quiet Wednesday due to the holiday week, with the exception of the metals sector. Copper futures prices are reacting to possible increased demand from China, and prices are showing a glimmer in subdued trading.

The December contract in copper futures was up 2.55 percent at 2.6105 in Wednesday mid-day trading in the commodities futures markets. Copper futures prices have risen around 16 percent so far this month on expectations of rising demand from China and an increase in infrastructure spending in the U.S. when Donald Trump becomes president. China and the U.S. are the top two consumers of the industrial metal.

Copper futures prices are also riding high after rumors filtered through commodities futures markets of bullish sentiment at a miners' conference in Shanghai.

Back in the U.S., Wednesday’s economic calendar was accelerated due to Thursday’s Thanksgiving Day holiday. Durable Goods Orders soared past expectations in October, up 4.8 percent compared to most economists’ expectations of a rise of 1.5 percent. The strong economic growth outlook, tightening labor market and rising inflation are likely to encourage the Federal Reserve to raise interest rates next month, analysts said.

At present, the probability that the Federal Open Market Committee will increase the fed funds rate at the December 13-14 policy meeting is 98 percent compared to 68 percent at the start of the month.

New Home Sales in October grew 563,000, according to the U.S. Department of Commerce, compared to forecasts of 595,000 during the month. Analysts say the lower pace was due to strong demand for housing combined with dwindling supply, which is keeping prices higher. However, last week Building Permits data showed that home builders broke ground on more homes in October since 2007.

Initial claims for state unemployment benefits increased 18,000 to a seasonally adjusted 251,000 for the week ended November 19, according to the U.S. Department of Labor. Economists had forecast first-time applications for jobless benefits rising to 250,000 in the latest week. This week’s reading was up from the prior week’s 43-year low, but still below 300,000 for 90 weeks in a row.

The University of Michigan Consumer Sentiment index was also released Wednesday, showing at 93.8 compared to a 91.8 reading expected by economists.

Before taking off early for the holiday, commodities futures markets participants, particularly within the metals sector, are awaiting the minutes from the Federal Reserve’s November 2 meeting this afternoon.

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