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.

Credit Suisse logo. (PRNewsFoto/Credit Suisse)

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

Credit Suisse AG
Credit Suisse AG is one of the world's leading financial services providers and is part of the Credit Suisse group of companies (referred to here as 'Credit Suisse'). As an integrated bank, Credit Suisse offers clients its combined expertise in the areas of private banking, investment banking and asset management. Credit Suisse provides advisory services, comprehensive solutions and innovative products to companies, institutional clients and high-net-worth private clients globally, as well as to retail clients in Switzerland. Credit Suisse is headquartered in Zurich and operates in over 50 countries worldwide. The group employs approximately 46,720 people. The registered shares (CSGN) of Credit Suisse's parent company, Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares (CS), in New York. Further information about Credit Suisse can be found at www.credit-suisse.com.

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. 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 necessarily a guide to the future. 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.

Copyright © 2017, CREDIT SUISSE GROUP AG and/or its affiliates. All rights reserved.

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