Commodity Market Declined Amid Continued Macroeconomic Uncertainty in December

Commodity Market Declined Amid Continued Macroeconomic Uncertainty in December

PR Newswire

NEW YORK, Jan. 8, 2013

NEW YORK, Jan. 8, 2013 /PRNewswire/ -- Commodities were lower in December as
continued uncertainty weighed on markets.


Nelson Louie, Global Head of Commodities in Credit Suisse's Asset Management
business, said, "Commodities ended 2012 lower as a result of disappointing
growth momentum. Although markets were largely focused on the looming US
Fiscal Cliff towards the end of the year, the US managed to avert economic
calamity with lawmakers approving a deal on January 1, 2013. Over the year
ahead, the rate of global growth will likely once again be the key to
commodity performance. To that end, recent developments suggest that 2013 may
be a better year for the asset class. The recent evidence continues to suggest
that global growth may have troughed, with the possibility of a modest rebound
over the course of the new year."

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total
Commodity Return Strategy, added, "Commodities could benefit from a rebound in
global growth along with continued low interest rates. Inflation may
overshoot expectations if economic activity begins to pick up more robustly
than expected. Commodities have historically tended to outperform during
periods of higher than expected inflation. Commodities may also continue to
provide exposure to 'tail risk' events on the supply side, with the Energy and
Agriculture sectors remaining particularly vulnerable. We believe investors
will continue to derive long-term diversification benefits that commodities

The Dow Jones-UBS Commodity Index Total Return was down by 2.61% in December.
Overall, 12 out of 20 index constituents posted negative returns. Agriculture
was the worst performing sector, down 4.46%. Wheat and corn declined after
the USDA reported a slowdown in export demand. In addition, soybeans and corn
were further pressured lower due to improved weather conditions in South
America. Precious Metals declined, losing 3.81%, as a result of the looming
fiscal cliff, despite Chairman Bernanke's early-December announcement that the
Federal Reserve would be targeting lower unemployment before reigning in its
extremely accommodative monetary policies. Energy decreased 1.95%, led lower
by Natural Gas as winter weather forecasts for the US remained relatively
mild. The Industrial Metals sector ended the month slightly lower, down
0.74%, amid signs of inventory builds in China and in London Metals Exchange
warehouses. Livestock was relatively unchanged, up 0.45%. However, Russia
announced it will require US exporters to certify that all pork and beef
shipments are free of a controversial feed additive, effectively banning US
exports. This move was largely seen as political retaliation for a recently
passed bill in the US Senate.

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:

  oSpot Return: price return on specified commodity futures contracts;
  oRoll Yield: impact due to migration of futures positions from near to far
    contracts; and
  oCollateral Yield: return earned on collateral for the futures.

As of December 31, 2012 the team managed approximately USD 11.2 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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