November Sees Consolidation in Commodity Markets

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Dec 10, 2014, 03:21 ET

NEW YORK, Dec. 10, 2014 /PRNewswire/ -- Commodities were lower in November, largely driven by macroeconomic factors, according to Credit Suisse Asset Management.

The Bloomberg Commodity Index Total Return performance was negative for the month, with 15 out of 22 Index constituents trading lower.

Credit Suisse Asset Management observed the following:

Energy was the worst performing sector, down 10.47%, led lower by crude and petroleum products, as the market continued to price in expectations for growing excess supplies.
Industrial Metals declined 3.37%. Copper led base metals lower after a three-week strike at the sixth largest copper mine in the world came to an end, easing production concerns. Chinese demand concerns also continued, as economic growth remained lower.
Agriculture was down 1.14%, led lower by Cotton. China decreased its imports of cotton after accumulating inventories for the past three years to support its domestic growers while India, the world's largest producer, is set to harvest another record crop this year.
Precious Metals decreased slightly, down 0.68% for the period. Silver was lower due to forecasts for weaker industrial demand.
Livestock increased slightly, up 0.83%. Live Cattle rose due to continued growth in beef demand while supplies remained tight. In November, the USDA forecasted US cattle production will decline by 3.2% in 2015.

Nelson Louie, Global Head of Commodities for Credit Suisse Asset Management said: "During November, weather-related supply shocks were supportive of some index constituents while macroeconomic factors continued to be mixed. Extreme cold conditions across the US increased fears that there will be a repeat of last year's difficult winter, driving Natural Gas prices higher. However, most of the global focus may remain on oil. If prices continue to fall, pressure may mount on OPEC to eventually cut production. Tensions may increase between oil producing nations who can function despite lower oil revenues against countries who depend on higher oil prices to balance their budgets. In the US, although lower oil prices may increase household income, the impacts are no longer purely positive as a significant proportion of US economic growth is currently coming from the production of energy and transportation infrastructure."

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, "Overall, the US showed further signs of growth, including an upward revision in GDP and a lower unemployment rate. Meanwhile, Japan unexpectedly moved into a recession, despite higher exports reported for October. ECB President Mario Draghi strengthened his convictions towards quantitative measures to ease disinflation concerns within the European Union. Finally, China reduced interest rates for the first time in two years to support its economy. As a result, global demand expectations for cyclical commodities remained weak, awaiting further signs of economic growth. However, the renewed commitment from some major central banks to help their respective economies may help to support growth in the near- to mid-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 November 30, 2014, the Team managed approximately USD 10.4 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