June Sees Fundamental Factors Drive Commodity Markets Higher

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Jul 14, 2015, 09:00 ET

NEW YORK, July 14, 2015 /PRNewswire/ -- Commodities increased in June as fundamentals improved for the Agriculture Sector, according to Credit Suisse Asset Management.

The Bloomberg Commodity Index Total Return performance was positive for the month, with 11 out of 22 Index constituents trading higher.

Credit Suisse Asset Management observed the following:

Agriculture was the best performing sector, up 12.81%, led by grains. Excess rainfall in the U.S., and not enough in Europe and Canada, increased concerns of damaged Wheat crops. In addition, Soybean Meal increased after the U.S. Department of Agriculture ("USDA") reported lower than expected stocks of Soybeans.
Energy declined slightly, down 0.44%. Brent Crude Oil led the sector lower amid increased production. The International Energy Agency ("IEA") reported that OPEC production increased in May, despite continued oversupply. Heightened concerns over the future of Greece and the Eurozone weighed on demand expectations.
Precious Metals ended the month 2.98% lower amid positive U.S. economic data, reducing demand for safe haven assets.
Industrial Metals decreased 4.85% as a continued weak economic growth outlook for China weighed on base metals demand expectations.
Livestock declined the most, down 5.41%. Lean Hogs decreased the most due to an increase in U.S. pork supplies. The USDA reported that the domestic hog herd was 9.7% larger as of June 1^st compared to previous years.

Nelson Louie, Global Head of Commodities for Credit Suisse Asset Management, said: "After a slow start to the year, global growth showed signs of acceleration. In the U.S., growth signals indicated steady improvement, including an increase in consumer sentiment levels and an improved labor market. While Greece dominated the headlines, economic data out of Europe remained encouraging as manufacturing and service sector data improved. Chinese economic data remained mixed and continued to indicate that the economic health of the manufacturing sector remains uncertain. However, continued active monetary policy out of China may help pull the manufacturing sector along, which may be supportive of demand expectations of economically sensitive commodities."

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, "Much of the global focus will remain on the impacts of a potential Greek exit from the Eurozone and the negative ramifications it may have on European and global growth. However, this will also further pressure the European Central Bank to maintain its accommodative stance. It may also influence other central banks to maintain easier policy than they otherwise would. While these macroeconomic factors will likely continue to be important in the near-term, idiosyncratic fundamental factors of individual commodities are expected to continue to be the main driver of commodity returns in the long-term."

About the Credit Suisse Total Commodity Return Strategy

Credit Suisse's Total Commodity Return Strategy is managed by a team with over 28 years of experience, 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 June 30, 2015, the Team managed approximately USD 11.5 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.

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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