Press release from PR Newswire
Commodity Market Decreased in September Amid Mixed Fundamentals
Wednesday, October 09, 2013
Commodity Market Decreased in September Amid Mixed Fundamentals10:43 EDT Wednesday, October 09, 2013
NEW YORK, Oct. 9, 2013 /PRNewswire/ -- Commodities were lower in September as decreased geopolitical risk and commodity-specific fundamentals weighed on the market.
Nelson Louie, Global Head of Commodities in Credit Suisse's Asset Management business, said, "As of month end, headlines were focused on the US government shutdown which began on October 1st. There is also heightened concern over a potential failure to raise the debt ceiling on time, as well as unease surrounding the ability of policymakers to reach a lasting solution when these issues arise again towards the end of the year. Uncertainty on the fiscal front may have been one obstacle standing in the way of the Federal Reserve tapering its quantitative easing program at the September FOMC meeting. It is possible that fiscal risks that are not fully resolved may lessen the chances that the Federal Reserve tapers at either the October or the December FOMC meeting."
Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, "Markets choppy during the summer amid speculation that the Federal Reserve would begin the process of slowly tightening its monetary policies. Removal of this risk in the near term may be accommodative of risk appetite and further aid the economic recovery. It may also increase already heightened risks of inflation eventually overshooting expectations. Commodities have been increasingly driven by commodity specific factors, helping to lead to reduced correlations. We continue to expect commodities to provide valuable diversification benefits amid heightened periods of uncertainty."
The Dow Jones-UBS Commodity Index Total Return decreased 2.55% in September. Overall, 12 out of 22 index constituents posted negative returns. Precious Metals ended the month 5.63% lower as geopolitical tensions in the Middle East eased, decreasing the appeal of precious metals as a safe haven, and on continued uncertainty surrounding the future of the US Federal Reserve's monetary stimulus program. Energy declined 4.31%, with all sector components lower. Natural Gas decreased as mild weather resulted in weaker-than-expected shoulder season demand. Meanwhile, fading worries over tensions in Syria and Iran helped ease risks to crude oil supply from the Middle East. Libya's crude oil production recovered to nearly 40% of its pre-war capacity with exports set to rise as major western fields ramped up output after protesters agreed to reopen them. Agriculture decreased 1.94%. Corn, Soybeans and soybean products declined amid favorable crop weather as the growing season transitioned to harvest. Livestock was the best performing sector, up 1.70%, led by Lean Hogs. Pork supplies remained tight due to reduced hog slaughter relative to last year in the face of increased demand. The largest contributor to demand growth has come from pork bellies, used to make bacon. The USDA also reported increased beef and pork exports for July. Industrial Metals increased 1.57%. The Federal Reserve's surprise decision to leave its bond buying program intact supported base metals. This supported risk appetite and emerging market growth expectations. Chinese industrial profits were reported to be up sharply for August compared to the prior month and year, which boosted demand expectations.
About the Credit Suisse Total Commodity Return Strategy
Credit Suisse's Total Commodity Return Strategy has been managed for 18 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 September 30th, 2013 the team managed approximately USD 11.1 billion in assets globally.
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 is able to offer clients its expertise in the areas of private banking, investment banking and asset management from a single source. Credit Suisse provides specialist advisory services, comprehensive solutions and innovative products to companies, institutional clients and high net worth private clients worldwide, and also to retail clients in Switzerland. Credit Suisse is headquartered in Zurich and operates in over 50 countries worldwide. The group employs approximately 46,300 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.
Asset 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 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 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 © 2013, CREDIT SUISSE GROUP AG and/or its affiliates. All rights reserved.
SOURCE Credit Suisse AG
For further information: Perrin Wheeler, Corporate Communications, tel. 212 325 8978, firstname.lastname@example.org