NEW YORK, Jan. 14, 2015 /PRNewswire/ --Commodities were lower in December, largely characterized by fundamental factors, according to Credit Suisse Asset Management.
The Bloomberg Commodity Index Total Return performance was negative for the month, with 16 out of 22 Index constituents trading lower.
Credit Suisse Asset Management observed the following:
- Energy was the worst performing sector, down 22.06%, led lower by Natural Gas. Crude oil and petroleum products also declined due to increasing production amid expectations for weaker oil demand growth.
- Livestock declined 4.84%, led lower by Lean Hogs, as cheaper feed costs allowed farmers to achieve heavier hog weights, which increased pork supply expectations throughout the period.
- Industrial Metals ended the period 4.34% lower. Weak economic data out of China, including lower-than-expected Industrial Production data for November, heightened demand concerns for base metals.
- Agriculture decreased 1.92%, led lower by Coffee, as expectations of sufficient rainfall in Brazil's key growing regions continued to ease the supply concerns caused by a severe drought earlier in the year.
- Precious Metals increased slightly, up 0.63%. While Gold led the sector higher, Silver also increased slightly amid speculation that China will increase its stimulus measures to help boost its economy, increasing the appeal of Precious Metals.
Nelson Louie, Global Head of Commodities for Credit Suisse Asset Management said: "The end of 2014 continued to be characterized by fundamental factors driving commodity returns. Supply surpluses, particularly in the Energy sector, became the most prominent theme as crude oil prices fell sharply. While lower oil prices may be fueling consumer confidence and retail spending in most economies, some North American oil producers have begun to feel the effects of falling prices. On a grand scale, persistently low oil prices may heighten geopolitical tensions between the winners and losers in this production battle, potentially affecting the supply/demand balance across multiple commodity sectors."
Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, "Geopolitical risks remain elevated due to uncertainty in Russia amid its sharply declining Ruble and lower oil prices, in addition to ongoing conflict in the Middle East. Meanwhile, continued weak manufacturing data reaffirmed the commitment of China and the ECB to assorted stimulus measures. Amid these accommodative efforts from major central banks, along with a strengthening US economy, global growth signals may improve and could be supportive of global commodity demand growth in the medium- to long-term."
About the Credit Suisse Total Commodity Return Strategy
Credit Suisse's Total Commodity Return Strategy has been managed for over 19 years and seeks to outperform the return of a commodities index, such as the Bloomberg 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 December 31, 2014, the Team managed approximately USD 9.5 billion in assets globally.
Credit Suisse AG
Credit Suisse AG is one of the world's leading financial services providers and is part of the Credit Suisse group of companies (referred to here as 'Credit Suisse'). As an integrated bank, Credit Suisse is able to offer clients its expertise in the areas of private banking, investment banking and asset management from a single source. Credit Suisse provides specialist advisory services, comprehensive solutions and innovative products to companies, institutional clients and high net worth private clients worldwide, and also to retail clients in Switzerland. Credit Suisse is headquartered in Zurich and operates in over 50 countries worldwide. The group employs approximately 46,000 people. The registered shares (CSGN) of Credit Suisse's parent company, Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares (CS), in New York. Further information about Credit Suisse can be found at www.credit-suisse.com.
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 © 2015, CREDIT SUISSE GROUP AG and/or its affiliates. All rights reserved.
SOURCE Credit Suisse AG