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Commodity Market Higher In August, Driven By Supply-Side Concerns

NEW YORK, Sept. 12, 2012 /PRNewswire/ -- Commodity performance was positive in August, supported by gains in precious metals and petroleum products.

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Nelson Louie, Global Head of Commodities in Credit Suisse's Asset Management division, said, "Commodities continued to increase in August, driven higher by precious metals and petroleum products. Base metals traded broadly sideways, with soft demand readings outweighing potential tailwinds from further quantitative easing.  Policy implementations and developments in Europe are likely to remain a key concern.  Industrial production growth in China has continued to disappoint, and is also likely to continue to weigh on sentiment until signs of improvement emerge." 

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, "Recent comments by the head of the US Federal Reserve and the European Central Bank, along with still wavering economic recoveries in much of the world, suggest further monetary easing measures may be likely.  However, inflation expectations remain anchored near historic levels which may lead to inflation overshooting expectations if economic activity begins to pick up more robustly than expected.  Commodities have historically tended to outperform during periods of higher than expected inflation.  We believe investors will continue to benefit from the long-term diversification benefits that commodities provide."

The Dow Jones-UBS Commodity Index Total Return was up by 1.30% in August.  Overall, 12 out of 20 index constituents posted positive returns.  Precious Metals was the best performing sector, up 6.22%, amid increased expectations for the launch of another round of quantitative easing.  Energy increased, gaining 1.39%, led by refined petroleum products.  Crude Oil was also higher, supported by reduced OPEC production and strong growth in emerging market demand.  Agriculture was relatively unchanged, up 0.52%, due to mixed performance from sector constituents.  Cotton was higher as China continued to turn to US exports to meet textile mill demand and build inventory levels.  2012 cotton imports through July were more than double their level for the same period in 2011.  Soybeans and Soybean Oil were also higher due to larger than expected US exports.  Coffee decreased as favorable weather in Brazil led to increased confidence in the 2012-13 coffee harvest, which is now over 80% complete.  The Industrial Metals sector was also relatively unchanged, up 0.28%.  The latest Chinese manufacturing data again disappointed, weighing on demand expectations.  Livestock decreased 1.81% for the month, led lower by Lean Hogs despite the USDA's promise to purchase up to $100 million of pork in an effort to support the farm community. 

The Credit Suisse Total Commodity Return Strategy group periodically produces updates on relevant industry topics. For a copy of the team's white paper, "Commodities Outlook: Increased Volatility, Increase Opportunity?", please contact your Credit Suisse Relationship Manager. 

About the Credit Suisse Total Commodity Return Strategy

Credit Suisse's Total Commodity Return Strategy has been managed for 18 years and seeks to outperform the return of a commodities index, such as the Dow Jones–UBS Commodity Index Total Return or the S&P GSCI Total Return Index, using both a quantitative and qualitative commodity research process. Commodity index total returns are achieved through:

  • Spot Return: price return on specified commodity futures contracts;
  • Roll Yield: impact due to migration of futures positions from near to far contracts; and
  • Collateral Yield: return earned on collateral for the futures.

As of August 31, 2012 the team managed approximately USD 10.9 billion in assets globally. 

Credit Suisse AG
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Asset Management
In its Asset Management business, Credit Suisse offers products across a broad spectrum of investment classes, including hedge funds, credit, index, real estate, commodities and private equity products, as well as multi-asset class solutions, which include equities and fixed income products. Credit Suisse's Asset Management business manages portfolios, mutual funds and other investment vehicles for a broad spectrum of clients ranging from governments, institutions and corporations to private individuals. With offices focused on asset management in 19 countries, Credit Suisse's Asset Management business is operated as a globally integrated network to deliver the bank's best investment ideas and capabilities to clients around the world.

All businesses of Credit Suisse are subject to distinct regulatory requirements; certain products and services may not be available in all jurisdictions or to all client types.

Important Legal Information
This document was produced by and the opinions expressed are those of Credit Suisse as of the date of writing and are subject to change without obligation to update. It has been prepared solely for information purposes and for the use of the recipient. It does not constitute an offer or an invitation by or on behalf of Credit Suisse to any person to buy or sell any security. Any reference to past performance is not a guide to future performance. The information and analysis contained in this publication have been compiled or arrived at from sources believed to be reliable but Credit Suisse does not make any representation as to their accuracy or completeness and does not accept liability for any loss arising from the use hereof.

Certain information contained in this document constitutes "Forward-Looking Statements" (including observations about markets and industry and regulatory trends as of the original date of this document), which can be identified by the use of forward-looking terminology such as "may", "will", "should", "expect", "anticipate", "target", "project", "estimate", "intend", "continue" or "believe", or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties beyond our control, actual events, results or performance may differ materially from those reflected or contemplated in such forward-looking statements. Readers are cautioned not to place undue reliance on such statements. Credit Suisse has no obligation to update any of the forward-looking statements in this document.

Certain risks relating to investing in Commodities and Commodity-Linked Investments:   Exposure to commodity markets should only form a small part of a diversified portfolio. Investment in commodity markets may not be suitable for all investors. Commodity investments will be affected by changes in overall market movements, commodity volatility, exchange-rate movements, changes in interest rates, and factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Commodity markets are highly volatile. The risk of loss in commodities and commodity-linked investments can be substantial. There is generally a high degree of leverage in commodity investing that can significantly magnify losses. Gains or losses from speculative derivative positions may be much greater than the derivative's original cost. An investment in commodities is not a complete investment program and should represent only a portion of an investor's portfolio management strategy.

Copyright © 2012, CREDIT SUISSE GROUP AG and/or its affiliates.  All rights reserved.

 

SOURCE Credit Suisse AG



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