Over the past few weeks we have seen copper prices on the rise, and last week we read that copper supplies will be tight into the first half of 2013.
Last week March 2013 copper opened at $3.5425 per pound and closed the week at $3.6500. On the daily chart you can see that the price action in copper played with but never closed below $3.4500 for two weeks in mid-November.
The technicals on the daily chart show the price actions trend strengthening with ADX at 23.9 and DI Differential at 19.46 and rising. MACD is bullish adding divergence from above the signal line along with crossing up over the zero-line on the histogram. Stochastics are now in deep overbought territory, so will want to see ADX continue to rise. On the weekly chart, we see ADX at 32.7 and looks to have stopped dropping, and look at the DI Differential with DI+ well over DI-. Stochastics on the weekly chart are mid-range and rising.
Proceed to Page 2 for the latest COT Data...
Looking at big money, we see this past week that Producers added to net short now -45,736 contracts. Swap Dealers added to net long now at 52,818 and Managed Money has continued dropping net short now -1,553 contracts. You want to see copper at $4.0000? We will need to see Managed Money getting into and increasing their net long side.
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Proceed to Page 3 for this week's detailed fundementals...
So what about the tight supplies? First Chile is by far the world’s largest copper producer. Chile also has the largest reserves worldwide, actually double the reserves of number two Peru, which is the world’s second largest producer. Chile’s reserves are 190,000 million tons and supplies one third of worldwide copper. At current extraction rates, they will be extracting copper for the next 100 years. Other countries with large reserves — and these are all in millions of tons — are Peru at 90,000, Australia at 86,000, Mexico at 38,000, United States at 35,000, Russia at 30,000, China at 30,000, Indonesia at 28,000 and Poland at 26,000. Also note that copper is a highly recycled metal. Estimates are that 80% of what has been mined since 1900 is still above ground today. Will we see a test of $3.7000 this week? Watch and see.
Have a prosperous trading week.
So watching the posture change by big money and the media feeding tight copper supplies we should see copper continue to rise.
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