NEW YORK, Oct. 11, 2016 /PRNewswire/ -- Commodities
increased in September, broadly due to supply fundamental factors,
according to Credit Suisse Asset Management.
The Bloomberg Commodity Index Total Return performance was
positive for the month, with 18 out of 22 Index constituents
posting gains.
Credit Suisse Asset Management observed the following:
- Industrial Metals was the best performing sector, up 5.21%, led
by Nickel amid reports that the
Philippines may suspend additional mines for failing to meet
environmental standards as a result of the government's audit.
- Agriculture ended 4.25% higher. Sugar gained the most as UNICA,
the Brazilian Sugarcane Industry Association, reported
lower-than-expected domestic cane yields. In addition, the
International Sugar Organization forecasted a global sugar deficit
for the 2016-2017 season.
- Energy gained 4.17%, led by Gasoline, due to tightening
supplies in the US. The US Energy Information Administration
reported much larger-than-expected decreases in gasoline
inventories at the beginning of the month.
- Precious Metals increased 1.13%, led by Silver, as the US
Federal Reserve (Fed) kept interest rates unchanged while reducing
their outlook for future rate hikes.
- Livestock declined the most, down 13.24%, as higher supply
expectations weighed on the sector broadly.
Nelson Louie, Global Head of
Commodities for Credit Suisse Asset Management, said: "September
was generally a strong month for commodities. Adverse weather
impacted softs, particularly sugar, as frosts in Brazil and lower-than-average monsoon rain in
India led to concerns over cane
yields. The potential for future disruptive weather remains
uncertain as expectations for a La Niña vary. Within Energy, OPEC's
tentative agreement for modest production cuts boosted market
sentiment. The details of the deal are not expected to be released
until OPEC's meeting in November, and significant uncertainty
remains. However, the provisional deal indicates that the group is
once again willing to play a key role in managing global supplies
and influencing prices. Saudi
Arabia's actual production cuts will likely be integral to
the agreement's impact in terms of bringing global supply and
demand into balance more quickly."
Christopher Burton, Senior
Portfolio Manager for the Credit Suisse Total Commodity Return
Strategy, added: "Global central bank policy may influence
commodity returns through year-end. While the European Central Bank
left its monetary policy unchanged in September, the Bank of
Japan introduced a new stimulus
tool that will set a target for 10-year interest rates. The
ramifications of Japan's measures
are unknown. Labor markets continue to show signs of improvement,
and hawkish language after the FOMC's September meeting increased
expectations for a December interest rate hike. If future economic
data comes in below expectations or if the upcoming US presidential
election leads to heightened risks, the US Federal Reserve may
refrain from raising rates this year. Both US and non-US central
banks seem committed to improving global growth and driving up
inflation, each of which may prove supportive 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 September 30, 2016, the Team
managed approximately USD 8.9 billion
in assets globally.
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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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