Bullish copper bets go wrong as hedge funds ignore warnings

Washington

Hedge funds ignored the warnings about the red-hot copper market, and it may have cost them.

After amassing their largest holdings ever, money managers saw the value of the metal plunge last week, halting the longest rally in a decade.

While global copper supplies are tightening, Barclays had warned clients in August that production shortfalls were "over-hyped", and Goldman Sachs said the metal was about 10 per cent above fair value. Even Oscar Landerretche, chairman of top producer Codelco, had said the gains weren't sustainable.

"Copper, really, is riding a wave of speculative fervour," said Chad Morganlander, a …