Copper, sugar and rubber futures slumped their daily limit in China, with copper set for its biggest four-day slide since 2008, on speculation the government will take steps to cool inflation, damping commodity demand.
Copper for February delivery dropped 5 percent, the maximum allowed by the Shanghai Futures Exchange, to 61,550 yuan （$9,259） per metric ton before trading at 61,560 yuan. Soybeans fell 4 percent and cotton, sugar and rubber declined 5 percent.
China is drafting measures to curb excessive price gains, Premier Wen Jiabao said yesterday, suggesting the government may raise interest rates and introduce price controls. Inflation in October was 4.4 percent, boosted by a 10.1 percent increase in food costs, statistics bureau data show. The futures exchanges have already announced moves to cool speculation.
“The precipitous fall indicates investors have become increasingly risk-averse, as the strong rally in the past few months seems vulnerable,” Wang Ning, an analyst at Xiangyu Futures Co., said by phone from Shanghai.
Commodities worldwide capped the biggest five-session slide since July 2009 yesterday. The Thomson Reuters/Jefferies CRB Index of 19 raw materials fell 3.2 percent to 296.22, bringing its decline since Nov. 9 to 7.2 percent. Three-month copper lost 0.3 percent to $8,124 a ton today on the London Metal Exchange after tumbling 5.7 percent yesterday.
Investor Retreat
A Chinese consumer confidence index fell for the first time in six quarters on expectations that the price of goods and services will keep increasing. The measure dropped to 104 in the third quarter from 109 in the previous three months, according to a statement from Nielsen Co. and the Chinese statistics bureau’s Economic Monitoring and Analysis Center.
“What I’ve seen was a lot of liquidation of long positions as investors retreat from the market and wait until they get a clearer macro picture,” Wang said.
Soybean futures jumped as much as 12 percent in Dalian this month and dropped 9.2 percent in the past four days, the biggest such decline since October 2008. Rubber soared as much as 28 percent in Shanghai, and fell 12 percent in the past four days, the most since December 2008.
Copper futures in Shanghai declined 10.4 percent in the past four sessions, heading for the biggest four-day slide since December 2008. Zinc slid 15 percent in the period, and was poised for the largest drop since November 2007.
Rate Speculation
China’s central bank may raise rates as soon as Nov. 19 because of sustained inflationary pressure, the China Securities Journal said today. Earlier announcements also indicate that rate decisions are often released on Fridays or around the 20th of the month, the newspaper reported.
Exchanges have introduced measures to cool speculation. The Dalian bourse said last week it will curb “abnormal” trading to prevent price manipulation and other activities that disrupt an orderly market. The Zhengzhou Commodity Exchange and Shanghai Futures Exchange have announced similar steps.
Stocks in China declined, with the Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, down 1.3 percent to 2,856.96. Aluminum in London gained 0.5 percent to $2,254 a ton, while zinc declined 1.8 percent to $2,100 a ton.
Corn for March delivery on the Chicago Board of Trade fell as much as 3.3 percent to $5.22 a bushel today, the lowest level for the most-active contract since Oct. 8, and traded at $5.29.
--Helen Sun, William Bi. Editor: James Poole
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