NEW YORK, Feb. 15, 2018 /PRNewswire/ -- Commodities
rose in January as adverse weather conditions threatened the
production of various commodities, according to Credit Suisse Asset
Management.
The Bloomberg Commodity Index Total Return performance was
positive for the month, with 14 out of 22 Index constituents
posting gains.
Credit Suisse Asset Management observed the following:
- Energy increased 4.51% as global inventories of crude oil and
petroleum products continued to tighten amid strong demand. Natural
Gas rose as frigid winter weather hampered output at the
Appalachian and Permian Basins while simultaneously increasing
heating demand.
- Precious Metals gained 1.93% as the US Dollar continued to
weaken.
- Agriculture rose 1.35%, led higher by Wheat, as dry and
freezing weather conditions threatened crop yields across the US
Great Plains.
- Industrial Metals increased slightly by 0.22%, as the sector
was broadly supported by stronger-than-expected US manufacturing
data for January and amid US Dollar weakness.
- Livestock declined 1.29%, led lower by Lean Hogs, due to US
production and inventories increasing versus last year.
Nelson Louie, Global Head of
Commodities for Credit Suisse Asset Management, said: "The
beginning of 2018 ushered in below freezing temperatures and
hazardous winter conditions for a large portion of the US. Natural
gas heating demand spiked while production in the Northeast and
Texas was hindered. End-of-month
inventories came in below the five-year historical average,
relieving some concerns of a supply glut. The freeze made it a
challenge for cattle to maintain their weight and forced farmers to
spend more on grains for feed. However, frigid temperatures did not
bring along snow cover in the US Grain Belt, leaving young wheat
crops without their winter protection. Another cold snap late into
the winter season could hamper beef output levels in the future and
threaten crop yields further.
Beyond the weather shock, natural gas pipeline construction
projects that were scheduled to be completed in the first quarter
of this year faced additional regulatory hurdles, delaying relief
to supply bottlenecks in the US Northeast. In addition, the
country's second Liquefied Natural Gas export facility in
Maryland faced construction
issues, causing additional supplies to remain on US soil. Elsewhere
in Energy, stronger-than-expected crude oil and petroleum demand
along with high compliance rates to the OPEC-led production cuts
continued to help with the global rebalance. US production
continued to grow, though exploration and production companies have
showed more restraint than in the past in terms of expanding
production so far."
Christopher Burton, Senior
Portfolio Manager for the Credit Suisse Total Commodity Return
Strategy, added: "Globally, major economies are showing
synchronized growth, which may encourage central banks to slowly
tighten while still remaining accommodative. The Bank of
Japan surprised markets after it
unexpectedly decreased the amount of government bonds it purchased,
providing evidence that the Japanese government may be slowly
beginning to taper its quantitative easing program. Within the US,
a combination of wage growth and rising consumer spending has
increased inflationary pressures. At the beginning of the month,
inflation expectations rose to over 2%, above the stated target by
the US Federal Reserve (Fed). Consumer confidence levels reduced
slightly, but still remains near its highest levels since the
financial crisis. The new Fed Chair Jerome
Powell is largely expected to keep in line with Janet Yellen's dovish and cautious policy style.
However, continued higher inflation readings may force the Fed to
react more quickly to prevent an overheating of the US
economy."
About the Credit Suisse Total Commodity Return
Strategy
Credit Suisse's Total Commodity Return Strategy is
managed by a team with over 32 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 January 31, 2018, the Team
managed approximately USD 8.9 billion
in assets globally.
Press Contact
Candice
Sun, Corporate Communications, +1 (212) 325-8226,
candice.sun@credit-suisse.com
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