NEW YORK, Sept. 12, 2016 /PRNewswire/ -- Commodities
declined in August, largely driven by supply fundamentals and
evolving macroeconomic headlines, according to Credit Suisse Asset
Management.
The Bloomberg Commodity Index Total Return performance was
negative for the month, with 14 out of 22 Index constituents
posting losses.
Credit Suisse Asset Management observed the following:
- Precious Metals was the worst performing sector, down 4.95%,
led lower by Silver. Positive US economic data increased
expectations that the US Federal Reserve (Fed) may raise interest
rates earlier than expected.
- Agriculture declined 4.78%, led by Soybean Meal, due to a
continued strong production outlook for Soybeans and Soybean Meal
following supportive weather conditions in the US Midwest.
- Industrial Metals ended the month 4.11% lower, with Nickel
posting the biggest loss, as Chinese imports in July decreased, and
economic data indicated continued weak demand.
- Livestock declined slightly, losing 0.09%, led lower by Live
Cattle. The US Department of Agriculture's August 12th World Agricultural Supply
and Demand Estimates Report revised projected beef production
higher for 2016 and 2017.
- Energy was the best performing sector, up 3.56%. Gasoline
gained the most after the US Energy Information Administration
reported a larger-than-expected drop in gasoline inventories
earlier in the month.
Nelson Louie, Global Head of
Commodities for Credit Suisse Asset Management, said: "With the US
growing season for grains nearing completion, a large crop looks
increasingly certain. Attention will slowly shift towards the
upcoming planting season in Latin
America. Weak emerging market currencies versus the US
Dollar resulted in commercial consumers sourcing grains from
outside of the US. As South American Corn and Soybean stocks are
already low, any planting delays or weather disruptions may support
prices. Within the oil and petroleum sector, market participants
are shifting their focus to the upcoming OPEC meeting, where
expectations for a potential agreement have increased as
Iran has regained market share.
Meanwhile, Saudi Arabia and
Russia are both producing at or
near record levels. However, US crude oil output has tightened from
mid-2015 peak levels amid significant production cuts. This may
provide support to oil prices, if and when OPEC decides to
act."
Christopher Burton, Senior
Portfolio Manager for the Credit Suisse Total Commodity Return
Strategy, added: "US Federal Reserve officials remained divided
over when to raise rates. Positive US economic data reinforced that
near-term risks remain subdued, increasing market expectations for
a September rate hike. However, given the uncertainty across other
major economies and the willingness of global central banks to use
further easing measures to revitalize their economies, the Fed may
remain patient. In the aftermath of the UK's vote to leave the EU,
the Bank of England cut interest
rates, while the Bank of Japan
announced a new fiscal stimulus package. If the Fed refrains from
increasing rates in September, they may only hike once more at the
end of this year. This may lead to US Dollar weakness, which could
potentially be positive overall for commodities."
About the Credit Suisse Total Commodity Return
Strategy
Credit Suisse's Total Commodity Return Strategy is
managed by a team with over 29 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 August 31, 2016, the Team
managed approximately USD 8.5 billion
in assets globally.
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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
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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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