Copper Hits One-Week High


NEW YORK ( TheStreet) -- May copper futures extended recent gains on Wednesday, rising 2.5% to $4.37 a pound and hitting a one-week high amid speculation that Chinese rate hikes won't temper the country's appetite for copper.

The iPath Dow Jones-UBS Copper Subindex Total Return ETN ( JJC) was popping 3% to $57.90, and Global X Copper Miners ETF ( COPX) was up 0.8% to $20.79.

"We suspect the Chinese rate rises are not doing much to dislodge the upward run in commodities, as investors have yet to see any fallout from tighter money coming out in the way of deteriorating Chinese macro data," said MF Global analyst Ed Meir.

"Until that happens, it seems that most markets are either going to push higher (such as oil) or stay at elevated levels (such as many of the base metals)," Meir said.

Fanning the flames of copper bulls was copper-producing behemoth Freeport-McMoRan ( FCX), which said that China's hunger for copper continues unabated despite its fiscal tightening and that the country's inventory of the metal will be depleted in the coming months.

Shares of Freeport were falling 0.4% to $56.39; Southern Copper ( SCCO) was down 0.6% to $40.23. Copper miner Taseko Mines ( TGB) was flat at $5.94.

MF Global's Meir said a rate increase coming out the European Central Bank by Thursday could initially set markets back, but he felt the move would likely be shrugged off quickly, similar to the reaction to recent fiscal tightening in China.

Copper fabricator Encore Wire ( WIRE) was up 0.3% to $26.31, while fabricator Lihua International ( LIWA) was down 2% to $8.69.


(Published at 12:08 pm)

The Japanese yen has sunk to a six-month low against the U.S. dollar on speculation that Japan's central bank will take longer than other countries to raise interest rates.

The U.S. dollar was rising 0.6% against the Japanese currency at 85.329 yen. On Wednesday, the U.S. currency hit a six-month high against the Japanese currency at 85.515 yen.

The Bank of Japan is expected to announce that it has kept its target rate at zero to 0.1% at the end of its two-day meeting on Thursday, according to a Bloomberg survey of economists, as the country tries to get back on its feet again after being struck by a massive earthquake and tsunami on March 11.

The dollar was falling 0.5% against the euro at EUR 0.69939, with the European Central Bank widely expected to raise its key interest rate by 25 basis points.

ProShares UltraShort Yen ( YCS) was rising 1.1% to $17.09, PowerShares DB US Dollar Index Bearish ( UDN) was up 0.5% to $28.32 and CurrencyShares Euro Trust ( FXE) was 0.8% higher at $142.85.


U.S. Treasuries were falling on speculation that the Federal Reserve could tighten monetary policy by year-end, along with an influential investor's criticism of government bond yields and rumors that the Fed is draining its reserves.

The two-year note was falling 0/32, pushing the yield up to 0.826%; the 10-year note was falling 6/32, lifting the yield to 3.507% and the 30-year bond was falling 11/32, lowering the yield to 4.528%.

Rumors are that the Federal Reserve is carrying out a reverse repurchase agreement by which it lends government securities and temporarily drains funds in the U.S. banking system. In these transactions, the securities are returned to the Fed upon maturity.

On Wednesday, Atlanta Federal Reserve President Dennis Lockhart said the U.S. economy remains vulnerable and isn't ready for interest rate hikes. Lockhart added that the Fed won't curtail its $600 billion bond-buying program, scheduled for completion by the end of June. Still, he said he wasn't completely ruling out a rate hike.

Fed Chairman Ben Bernanke says more commodity price increases could spur U.S. inflation and that the Fed would have to respond if such a scenario were to occur.

Pimco chief Bill Gross told CNBC that the Fed has kept Treasury yields at levels too low to present reasonable returns for most investors.

ProShares UltraShort 7-10 Year Treasury Fund ( PST) was rising 0.6% to $42.63, ProShares UltraShort 20+ Year Treasury Fund ( TBT) was gaining 1.3% to $37.77, iPath US Treasury 10-year Bear ETN ( was) 0.7% higher at $53.76 and JPMorgan Double Short US 10 Year Treasury Futures ETN ( DSXJ) was up 0.6% to $54.56.

May copper futures on Wednesday were extending the previous day's gains, rising 2.3% to $4.36 a pound and hitting a one-week high amid speculation that Chinese rate hikes won't temper the country's appetite for copper.

iPath Dow Jones-UBS Copper Subindex Total Return ETN ( JJC) was popping 2.7% to $57.78, and Global X Copper Miners ETF ( COPX) was up 1.4% to $20.91.

"We suspect the Chinese rate rises are not doing much to dislodge the upward run in commodities, as investors have yet to see any fallout from tighter money coming out in the way of deteriorating Chinese macro data," said MF Global analyst Ed Meir.

"Until that happens, it seems that most markets are either going to push higher (such as oil) or stay at elevated levels (such as many of the base metals)" Meir said.

Fanning the flames of copper bulls was copper-producing behemoth Freeport-McMoRan ( FCX), which said that China's hunger for copper continues unabated despite its fiscal tightening and that the country's inventory of the metal will be depleted in the coming months.

Shares of Freeport were rising 2.5% to $58; Southern Copper ( SCCO) was 1.3% higher at $41.03. Copper miner Taseko Mines ( TGB) was up 0.8% to $5.99.

Meir said a rate increase coming out the European Central Bank by Thursday could set the markets back, though the move would likely be shrugged off by the markets as easily as the markets did with the recent Chinese fiscal tightening, he said.

Copper fabricator Encore Wire ( WIRE) was up 0.9% to $26.45, while fabricator Lihua International ( LIWA) was down 1.7% to $8.72.


(Published at 9:49 am)

Cotton was popping by the daily exchange limit of 7 cents, or 3.5%, to $2.08 a pound, spurred by expectations of delayed harvests in Australia.

Reports say that cotton gathering in the various cotton growing regions of Australia have been delayed by wet weather.

In March, Australia's Bureau of Meteorology said the cotton-growing regions of Australia may experience more rain than usual in April and May.

"Follow-through buying today on technical considerations in May and July, and a combination of strong technicals, and a developing bullish fundamental story for December," were allowing cotton to rally, said veteran cotton industry analyst Mike Stevens.

Apparel companies were trading in positive territory.

The Buckle ( BKE) was rising 1.1% to $40.92, Urban Outfitters ( URBN) was adding 2.5% to $31.45, The Wet Seal ( WTSLA ) was gaining 4.1% to $4.53 and Pacific Sunwear of California ( PSUN) was popping 2.8% to $3.74.

Limited Brands ( LTD) was adding 0.9% to $34.80, Abercrombie & Fitch ( ANF) was gaining 2.9% to $67.45, Zumiez ( ZUMZ) was popping 3.7% to $28.43 and Aeropostale ( ARO) was rising 3% to $25.79.


U.S. banking giant Citigroup ( C) is planning to bolster its commodity team by one-third over the next two years to profit from the gains in copper, gold and cotton, according to a Bloomberg report.

Wheat for May delivery was rising 0.2% to $7.88 a bushel on global weather concerns.

"Once we get through this week's USDA (U.S. Department of Agriculture) report, the market will shift its focus wholly to weather for not only wheat but corn and beans as planting season gets under way," a Benson Quinn Commodities report said.

Weather reports indicate dryness in the U.S. central and southern plains, rains moving further south in the European Union, and dryness and warmth in Western Europe for the next two weeks, which Benson Quinn says raises some concerns for winter wheat crops in France and Germany.

Chinese grain-growing regions are expected to experience dryness as well.

Several food transporters and processors were trading in negative territory.

Archer Daniels Midland ( ADM) was down 0.2% to $36.96 and MGP Ingredients ( MGPI) was falling 0.1% to $8.88.

Food companies were trading in mixed territory.

General Mills ( GIS) was flat at $36.33, McDonald's ( MCD) was flat at $76.66 and Yum! Brands ( YUM) was up 0.4% to $50.14.

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