April Sees Fundamental Factors Drive Commodity Markets Higher

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May 12, 2015, 01:33 ET

NEW YORK , May 12, 2015 /PRNewswire/ -- Commodities were higher in April, largely driven by fundamental factors within the Energy Sector, according to Credit Suisse Asset Management.

The Bloomberg Commodity Index Total Return performance was positive for the month, with 14 out of 22 Index constituents trading higher.

Credit Suisse Asset Management observed the following:

Energy was the best performing sector, up 13.84%, with all constituents posting gains. Crude oil and petroleum products led the sector higher amid reports of declining US production and inventories, while demand continued to be strong.
Industrial Metals increased 7.81%, led by Zinc. Positive new home and construction data was reported out of China, increasing expectations for a recovery in base metals demand.
Livestock ended the period 1.73% higher, led by Lean Hogs. Exports were up sharply for the year through April 23^rd compared to the same period last year.
Precious Metals was the worst performing sector, down 0.84%. Silver led the sector lower as investment demand continued to be weak. While U.S. economic data was mixed, expectations were that it was still good enough for the Federal Reserve to consider tightening monetary policy sooner rather than later.
Agriculture decreased 0.52%, led lower by Wheat. Forecasts of continued rainfall in the U.S. Southern Plains alleviated expectations of damaged crops caused by unfavorable dry weather conditions earlier in the year, and increased yield expectations.

Nelson Louie, Global Head of Commodities for Credit Suisse Asset Management, said: "April was generally a strong month for Commodities, with the main focus on the Energy sector, as the sharp drop in rig counts and cutbacks in capital expenditures may start to provide support to the market. In addition, changes in Cabinet members in Saudi Arabia and geopolitical concerns in the Middle East increased uncertainty over the region's future oil production. In the US, as the summer growing season approaches, weather forecasts will increasingly play a bigger role in driving returns in the Agriculture sector. "

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, "At a macroeconomic level, signs of manufacturing activity in China were mixed, with PMI data hovering between expansion and contraction. However, the latest data exceeded expectations, suggesting government stimulus efforts may be working. The latest European PMI data indicated stronger levels of expansion, which may increase demand expectations for base metals. Uncertainty remains high regarding the impacts of divergent central bank policy, leading to increased levels of volatility across multiple asset classes. These risks, along with the elevated potential of inflation overshooting expectations, highlight the importance of having a diversified portfolio."

About the Credit Suisse Total Commodity Return Strategy

Credit Suisse's Total Commodity Return Strategy has been managed for over 28 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 April 30, 2015, the Team managed approximately USD 11.0 billion in assets globally.

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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.

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SOURCE Credit Suisse AG