Invest in Commodities through Copper Futures Contracts - dummies

Invest in Commodities through Copper Futures Contracts

By Amine Bouchentouf

Like most of the other important industrial metals, there’s a commodities futures market available for copper trading. Large industrial producers and consumers of the metal account for most of this market, although you also can use it for investment purposes. You have two copper contracts to choose from:

  • CME/COMEX Copper (COMEX: HG): This copper contract trades in the COMEX division of the Chicago Mercantile Exchange (CME). COMEX copper, which trades during the current month and subsequent 23 calendar months, is traded both electronically and through the open outcry system. It represents 25,000 pounds of copper and trades under the symbol HG.

  • LME Copper (LME: CAD): The copper contract on the London Metal Exchange (LME) accounts for more than 90 percent of total copper futures activity. It represents a lot size of 25 tons. Note: Because the LME is located in the United Kingdom, the British Financial Services Authority (FSA) regulates it.

Demand for copper from China, India, and other advanced developing countries is increasing, and that has put upward pressure on the price of copper. Check out the historic price levels (2002 – 2010) of copper futures on the CME/COMEX.