Commodity Market Higher In June, Relieved by Progress in Eurozone Crisis

   Commodity Market Higher In June, Relieved by Progress in Eurozone Crisis

PR Newswire

NEW YORK, July 10, 2012

NEW YORK, July 10, 2012 /PRNewswire/ -- Commodity performance was positive in
June, as concerns regarding the ongoing Eurozone crisis eased somewhat
following the EU Summit.

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Nelson Louie, Global Head of Commodities in Credit Suisse's Asset Management
division, said, "Commodities were higher in June after reacting positively to
the outcome of the European leaders' summit, which established some guidelines
for how the Euro area crisis will be handled and revealed that Germany is
willing to compromise.  However, we believe that the key driver of commodity
prices as we move into the second half of the year will ultimately be global
growth.  While we continue to hold the view that global GDP growth will be
stronger in the second half of the year than the first, the ongoing downswing
in cyclical momentum should be monitored closely."

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total
Commodity Return Strategy, added, "The worsening economic environment in
Europe and a perceived slowdown in China have raised concerns of a possible
softening in underlying consumption for economically sensitive commodities
such as petroleum and base metals.  However, further easing measures may
increase inflation expectations and the likelihood of inflation overshooting
expectations.  Commodities have historically tended to outperform during
periods of higher than expected inflation.  We believe investors will continue
to benefit from the long-term diversification benefits that commodities
provide."

The Dow Jones-UBS Commodity Index Total Return was up by 5.49% in June. 
Overall, 14 out of 20 index constituents increased in value.  Agriculture was
the best performing sector, up 13.87% for the month.  Concerns over crop
stress and yield loss due to the hot weather in the US Midwest (especially in
the Southern Corn Belt) were the key factors supporting the recent rally. The
USDA's Quarterly Stocks and Acreage reports revealed that US corn stocks as of
June 1st were below market expectations and down 14% year-on-year, which lent
further support to the market.  Livestock increased, gaining 2.92%, amid
reported lower Live Cattle slaughter rates and relatively poor US pasture
conditions.  Lean Hogs gained with hot weather amplifying a tightening of pork
supplies that usually happens this time of year.  The heat in the Midwest –
home to 70% of US hog production – has caused hogs to eat less, resulting in
smaller meat cuts per animal and lower pork supplies.  Energy also increased,
up 2.53% for the month, led by Natural Gas.  The hot weather in the US and
continued coal-to-gas switching drove increased power generation demand.  This
led to smaller than expected weekly storage injections, as reported by the
Department of Energy.  The Precious Metals sector ended the month 1.84%
higher.  European leaders agreed to create a single supervisory body for
Eurozone banks and allow them to be recapitalized without adding to government
debt, easing fears over Italy and Spain.  Gold was also supported by further
discourse that Basel accounting rules will classify gold as a Tier 1 asset. 
The Industrial Metals sector was relatively unchanged, up 0.38%, due to demand
growth concerns as Chinese and European manufacturing activity appeared to
contract, according to some recent economic surveys.  The Federal Reserve's
hesitance at engaging in further quantitative easing also weighed on the
sector.   

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 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:

  o Spot Return: price return on specified commodity futures contracts;
  o Roll Yield: impact due to migration of futures positions from near to far
    contracts; and
  o Collateral Yield: return earned on collateral for the futures.

As of June 30, 2012 the team managed approximately USD 10.1 billion in assets
globally. 

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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.

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SOURCE Credit Suisse AG

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