Hedging Against Falling Copper Prices using Copper Futures

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Hedging Against Falling Copper Prices using Copper Futures

Copper Futures Trading – Get the latest Copper futures prices, quotes, charts, Copper futures news, and futures contract specifications of metal futures.

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Current Copper Futures | Futures Prices

A penny saved is a nickel earned. Today, that statement seems to be relevant, nickel is made of 75% copper, and 25% nickel. Nickels currency value is 5 cents, however, like silver dimes, in 1965 their value was estimated at 10 cents, but today, they are valued at $2.00. This highlights the increasing demand and flexibility for copper future trading.

Copper Futures Trading

Copper futures, may not reach the pinnacles of gold and silver, but it’s worth, and in principle outweighs its monetary gains. For example, copper is used as a hedging tool, for global price discovery, that leads to a diversified portfolio.

Copper futures, are considered to be a standardized, exchange traded contracts that both the buyer and seller have to come to a mutual consensus on delivery of goods on a future deliver date. The two markets where copper is exchanged are the London Metal Exchange (LME) and the New York Mercantile Exchange (NYMEX). When quoting prices, under the London Metal Exchange, all contracts are negotiated in dollar and cents/metric ton, with lot sizes of 25 tonnes. In addition, with the New York Mercantile Exchange, everything is traded with 250,000 in dollar and cents/pound. In these two respective markets, the symbol for copper is CA on the London Metal Exchange, with an initial margin of 19%. Moreover, the New York Mercantile Exchange the symbol is HG, with an initial margin of 21%.

Setting goals, when investing, maps out how you want to approach coppers futures. A simple to goal, is to trade virtually, online for couple months, before investing money, to get an idea of the initial losses, or gains that could be made. Get a feel for fluctuations and copper market “personality” When trading futures with a broker, an in-depth analysis of their trading platforms, on how, each contract will be initiated, delivered, and completed, is vital. Understand, there are trading fees, for each contract, and that has to be part of the long term plan and budget, when trading futures.

Copper futures traded on COMEX division of NYMEX are open alomst 24 hours a day 5 days a week.

Product Symbol HG
Venue CME Globex, CME ClearPort, Open Outcry (New York)
Hours (All Times are New York Time/ET)
CME Globex: Sunday – Friday 6:00 p.m. – 5:15 p.m. (5:00 p.m. – 4:15 p.m. Chicago Time/CT) with a 45-minute break each day beginning at 5:15 p.m. (4:15 p.m. CT)
CME ClearPort: Sunday – Friday 6:00 p.m. – 5:15 p.m. (5:00 p.m. – 4:15 p.m. Chicago Time/CT) with a 45-minute break each day beginning at 5:15 p.m. (4:15 p.m. CT)
Open Outcry: Monday – Friday 8:10 a.m. – 1:00 p.m. (7:10 a.m. – 12:00 p.m. CT)
Contract Size 25,000 pounds
Price Quotation U.S. Cents per pound
Please note: Prices are disseminated in U.S. Dollars and Cents
Minimum Fluctuation $0.0005 per pound
Termination of Trading Trading terminates on the third last business day of the delivery month.

Visit the exchange website for up to minute schedule: http://www.cmegroup.com/trading/metals/base/copper_contract_specifications.html

As one of the first online commodity brokers in the industry, Cannon Trading has helped clients all over the world achieve their trading goals. We have been in business since 1988, and have received several customer service awards, and consistently maintained good standing with the NFA and CFTC.

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Our professional commodities brokers will work with you to understand your specific trading style and requirements, and provide you the essential advice and information you need to thrive in this highly lucrative market.

Cannon Trading’s Broker-assisted Trading solution provides traders who are new to the field with the essential advice and tools they need to accelerate their understanding of the copper futures market.

Contact us today to learn more about commodities trading, as well as information on options prices and contracts. Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

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Futures Contract Price Change
ESU19 / Sep 19 / GBLX (ESU19)

Open: 2948.00
High: 2961.75
Low: 2947.25
Last: 2955.00
Chg: +4.50
%Chg: +0.15%’)” onmouseout=”hideTooltip();”>Copper Futures
HGZ19 / Dec 19 / COMEX

2.5850 +0.0075

Copper Futures Prices — Historical Chart

Chart of Copper Futures updated April 1st, 2020. Click the chart to enlarge. Press ESC to close.

Disclaimer: This material is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.

Copper Futures Contract Specifications

Contract Specification Copper Futures
CME Globex Product Symbol (Electronic Trading) HG
Open Outcry Product Symbol (Trading Floor) DA
Contract Size “Contract Unit” shall mean twenty-five thousand (25,000) pounds.

The seller shall deliver one Contract Unit of copper with a weight tolerance of 2% either higher or lower. Said delivery shall be made up exclusively of:

(a) Grade 1 electrolytic cathodes as specified in Rule 111.03; and

(b) The product of one refiner as provided in Rule 111.04 Grade and Quality Specifications (1) The contract (basis) grade for the Grade 1 copper contract shall be Grade 1 Electrolytic Copper Cathodes (full plate or cut) and shall conform to the specifications (as to chemical and physical requirements) for Grade 1 Electrolytic Copper Cathode as adopted by the American Society for Testing and Materials (B115-00), or its latest revision.

(2) If the American Society for Testing and Materials adopts a change in the standard specifications for the aforementioned deliverable grade and such change is adopted and confirmed by the Exchange, copper conforming to the change so adopted, as well as copper conforming to the previous specifications, shall be eligible for delivery against the copper contract; provided, however, that the copper conforming to the previous specifications shall have been placed in a Licensed Warehouse prior to the date of the adoption and confirmation by the Exchange of the new specifications. Price Quotation Cents per pound Venue CME Globex, CME ClearPort, Open Outcry CME Globex Hours (EST) MON 9:05 a.m. – FRI 1:55 p.m. Central Time Daily trading halts 4:00 p.m. – 5:00 p.m. Central Time CME ClearPort Sunday – Friday 6:00 p.m. – 5:15 p.m. (5:00 p.m. – 4:15 p.m. Chicago Time/CT) with a 45-minute break each day beginning at 5:15 p.m. (4:15 p.m. CT) Open Outcry Hours (EST) MON-FRI: 9:05 a.m. -1:00 p.m. Central Time Minimum Fluctuation $0.0005 per pound Delivery Months and Days During each calendar month (the “current calendar month”), the Exchange will make available for trading contracts that provide for delivery of Copper in the following months: 1) the current calendar month; 2) the next twenty three consecutive calendar months and; 3) any March, May, July, September, and December falling within a 60-month period beginning with the current month. Price Multiples for Grade 1 Copper Contract Prices shall be quoted in multiples of five one-hundredths of one cent per pound. Contracts made on any other basis are prohibited. Warrants After copper has been placed in a Licensed Warehouse, Warrants stating the brand of cathodes, the number of pieces and such other data as may be required by the Exchange, shall be immediately issued to its owners. Warrants shall be lettered or numbered consecutively by each warehouse and no two receipts shall bear the same letter or number. If letters are used, they must not exceed three (3) characters, and if used in combination with numbers, they must precede the numbers. The numbers must not exceed 7 digits. No Warrant shall be issued for more or less than one contract unit. The Exchange makes no representation respecting the authenticity, validity or accuracy of any document or instrument delivered pursuant to these Rules. Delivery Against Grade 1 Copper Contract (a) Copper may be delivered against the Grade 1 copper contract only from a Licensed Warehouse designated by the Exchange. The Exchange may from time to time add or eliminate Licensed Warehouses after notice to members. Said notice shall fix the time when such changes shall become effective. The addition or elimination of a Licensed Warehouse shall not be deemed to affect the amount of money to be paid or the grade or quality of the copper to be delivered upon Exchange contracts, and shall be binding upon all such contracts entered into before and after the adoption of such change, anything in these By-Laws to the contrary notwithstanding.

(b) Deliveries shall be made without any allowance for freight except as otherwise provided in this subsection (b).

(c) The Warrants shall reference a signed declaration of the Licensed Warehouse, as to the origin of the copper and the grade thereof; such declaration to be in the following form and maintained on file at the Licensed Warehouse. This is to certify that the brand of of copper covered by Warrant #. issued by . (Licensed Warehouse) is the product of . (Approved Producer) an approved refiner for delivery of cathodes against the Commodity Exchange, Inc., Grade 1 copper contract and conforming to the specifications for Grade 1 copper cathodes pursuant to the By-Laws and Rules of the Exchange.

Copper 2020

Copper is one of many commodities that have been stuck in the downward channel in the recent years. But a 21.4% recovery in price of copper in the first quarter of 2020 from level around $2.5 to $2.95 made waves in the commodities market. This was a time of high hopes for copper together with lead, the other high performing commodity. All the major newspapers stated that the prices have been buoyed by optimism about global industrial recovery led by the biggest copper consumer China is stabilizing its economy. At the same time the Eurozone Central Bank was helping to improve economic conditions in order to kick-start the economy, which is a strong copper buyer as well.

Copper 2020: Factors that affected copper prices in the previous year

A weaker than expected US Dollar also helped to improve the price of copper, as the metal’s prices are set in American Dollar, and the asset becomes less expensive for foreign traders to purchase. But copper’s rally was primarily based on hopes and speculations and not on firm data.

Indeed copper has seen a major fallout from grace until the end of the year. All major buyers of copper contracts offloaded over 80% of their long positions and the market became mainly concerned by slower then expected industrial growth, particularly in China. It’s economy is on the brink of stagnation and there is no clear plan to solve the falling housing market, which is a key buyer of copper in China. And with imports falling more than 4% there was no reason for strong copper purchasing in China. Possible Grexit has been as well a major stir for European investors, as in case of Greece leaving the Eurozone, Europe’s demand for copper would be hurt. Strong US employment numbers and Central Bank’s interventions have made the US currency stronger and copper more expensive to buy.

The situation could have been far worse and the copper prices could have been even more bearish, if not the possible issues with copper supply, which may be disrupted. Taking into account the destocking of copper by China, supply is higher than demand and the copper prices have been destined to fall to around $2 by the end of the year, but copper mining and supplies are still in serious trouble. For instance, commodities giant Glencore PLC has seen its stock prices fall from more than 9% at a time, because of growing regional instability and closure of mines in Indonesia. At the same time, the International Copper Study Group released its findings saying that the demand is a few percents less than expected.

Finally, supply of copper, unlike oil or other major commodities, is very tight. Together with stronger US Dollar, European and Chinese industrial stagnation and investors panic the prices reasonably fell down sharply. The end of the year for copper and other commodities showed that there may be a demand in the future and that the prices may rise, but it was not there just yet. And if these hopes are based on fundamentals and not on speculations, next year may see a strong bullish period for copper.

Price linkages between Chinese and world copper futures markets

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