The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from PR Newswire

Commodity Markets Slightly Lower In March, Fundamentals Remain Supportive

Wednesday, April 11, 2012

Commodity Markets Slightly Lower In March, Fundamentals Remain Supportive10:24 EDT Wednesday, April 11, 2012NEW YORK, April 11, 2012 /PRNewswire/ -- Commodities were lower in March, despite improving macroeconomic backdrop.Nelson Louie, Global Head of Commodities in Credit Suisse's Asset Management division, said, "While commodities were generally lower in March, this was due to commodity markets remaining vulnerable to global supply shocks.  We believe that the majority of the price increase of oil over recent months was driven by tight fundamentals, with much of the risk premium related to supply risk, such as geopolitical risk.  Agriculture remained vulnerable to weather disruptions and has recently been supported by reports of dry weather in South America and a dramatic cooling of temperatures for much of Europe in February.  In base metals, new mining capacity proved more difficult and expensive to obtain while labor disputes continue to threaten existing production.  This may bode well for component prices as macroeconomic risk subsides."  (Logo: )Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, "The commodity markets were disappointed by dips in Chinese and European preliminary economic indicators, along with several of the regional surveys in the US.  While some suggested that the global rebound is running out of steam, recent positive data ? including housing starts, building permits and existing home sales ? have contributed to further optimism in the market.  In addition, the decline in US weekly initial jobless claims at the end of March provided reassurance that the US labor market recovery remains on track. We believe investors will continue to benefit from the inflation protection and diversification potential of holding diversified commodities exposure within a portfolio of traditional assets."  The Dow Jones-UBS Commodity Index Total Return was down by 4.14% in March.  Overall, 15 out of 20 index constituents decreased in value.  Livestock was the worst performing sector, down 8.06% for the month.  Weaker than expected domestic demand outweighed continued strong exports, further pressuring Lean Hogs.  Energy decreased, down 7.24%.  While Natural Gas was the main contributor to negative returns, petroleum prices were also under pressure as discussions surrounding a potential bilateral Strategic Petroleum Reserves (SPR) release involving the US and the UK impacted markets.  Industrial Metals declined, losing 5.39% for the month.  Concerns over potential near-term softness in Chinese demand weighed on the sector.  Inventory builds in Chinese warehouses fueled concerns that future demand may soften.  Precious Metals also declined, down 3.37%.  Both Gold and Silver had a difficult start to the month following Federal Reserve Chairman Ben Bernanke's semi-annual economic report to Congress on February 29th, in which he did not signal further monetary easing.  Agriculture was relatively unchanged, up 0.34%. The USDA's Prospective Plantings report and Quarterly Stocks report were released at the end of the month, revealing lower-than-expected acreage numbers for Soybeans and Wheat.  Corn, while declining for the month, rallied into the end of March as the same report showed that ending stocks were near multi-year lows.  The Credit Suisse Total Commodity Return Strategy group periodically produces updates on relevant industry topics. For a copy of the team's white paper, "Commodities Outlook: Increased Volatility, Increase Opportunity?", please contact your Credit Suisse Relationship Manager.  About the Credit Suisse Total Commodity Return Strategy Credit Suisse's Total Commodity Return Strategy has been managed for 17 years and seeks to outperform the return of a commodities index, such as the Dow Jones?UBS 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 March 31, 2012 the team managed approximately USD 10.9 billion in assets globally.  An investment in commodities is not a complete investment program and should represent only a portion of an investor's portfolio management strategy.  Investment in commodity markets may not be suitable for all investors. Commodity markets are highly volatile and the risk of loss in commodities and commodity-linked investments can be substantial.Credit Suisse AGCredit 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 49,700 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 Management In its Asset Management business, Credit Suisse offers products across a broad spectrum of investment classes, including hedge funds, credit, index, real estate, commodities and private equity products, as well as multi-asset class solutions, which include equities and fixed income products. Credit Suisse's Asset Management business manages portfolios, mutual funds and other investment vehicles for a broad spectrum of clients ranging from governments, institutions and corporations to private individuals. With offices focused on asset management in 19 countries, Credit Suisse's Asset Management business is operated as a globally integrated network to deliver the bank's best investment ideas and capabilities to clients around the world.All businesses of Credit Suisse are subject to distinct regulatory requirements; certain products and services may not be available in all jurisdictions or to all client types.Important Legal InformationThis 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 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 a guide to future performance. 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 © 2012, CREDIT SUISSE GROUP AG and/or its affiliates.  All rights reserved.SOURCE Credit Suisse AGFor further information: Katherine Herring, Corporate Communications, +1-212-325-7545,