NEW YORK, Dec. 12, 2017
/PRNewswire/ -- Commodities declined in November as demand
expectations for livestock and base metals weakened, according to
Credit Suisse Asset Management.
The Bloomberg Commodity Index Total Return performance was
negative for the month, with 11 out of 22 Index constituents
posting losses.
Credit Suisse Asset Management observed the following:
- Livestock decreased 5.91%, led lower by Lean Hogs, as domestic
and foreign demand weakened.
- Industrial Metals dropped 4.15% amid concerns about
China's pace of economic growth,
which lowered demand expectations for all base metals.
- Precious Metals declined 0.27% as weaker industrial demand
expectations weighed on Silver.
- Agriculture increased 0.40%, led higher by Cotton, after the
USDA reported higher-than-expected US cotton exports in a report
released on November 16th,
increasing demand expectations.
- Energy gained 2.32% as crude oil and petroleum products rose
amid increased political uncertainty in Saudi Arabia and further signs of strain in
Venezuela, which may curb
production and exports of crude oil.
Nelson Louie, Global Head of
Commodities for Credit Suisse Asset Management, said: "Base metal
supplies continued to be affected by production restrictions in
Asia amid strong demand.
However, the sector may face some headwinds as China adjusts policies to prevent its housing
market from overheating. Within Energy, Natural Gas prices
continued to swing on changing forecasts. As pipeline projects
remain incomplete, there is the potential for bottlenecks to occur
where gas production is not able to reach demand. In that scenario,
a colder-than-expected winter could drawdown immediate inventories.
Elsewhere, OPEC reached a decision to extend the oil production
cuts through the end of 2018, with reviews scheduled throughout the
year. The group remains focused on bringing inventories down to
five-year average levels. The main risk to this strategy is the
potential response from US producers who may grow production at
higher prices. One difference now, however, is that shale producers
may be exercising more discipline in growing output."
Christopher Burton, Senior
Portfolio Manager for the Credit Suisse Total Commodity Return
Strategy, added: "There continues to be evidence of moderate
strengthening in growth globally. Within the US, consumer spending
and confidence levels remained elevated. In addition, unemployment
reached a new low in October, though wage growth remained modest.
China reported growth which
exceeded expectations for the first nine months of the year due to
strong infrastructure spending. Inflation gradually increased in
the Eurozone for November, due to improved labor conditions and
higher energy prices. Despite numerous positive economic
indicators, inflationary pressures remain muted as businesses
remained cautious on borrowing capital to finance capital
expenditures. Markets are waiting to see if a US tax bill will be
passed, which could be supportive of future business growth, and
consequently, inflation. Offsetting this potential fiscal
inflationary source will be tightening monetary policy. Markets so
far assume the process of central banks' policy adjustments will be
orderly. Even a modest acceleration in the global economy from here
could potentially benefit commodity prices."
About the Credit Suisse Total Commodity Return
Strategy
Credit Suisse's Total Commodity Return Strategy is
managed by a team with over 30 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 November 30, 2017, the Team
managed approximately USD 8.5 billion
in assets globally.
Press Contact
Candice Sun, Corporate
Communications, +1 (212) 325-8226,
candice.sun@credit-suisse.com
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Investment in commodity markets may not be suitable for all
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