Commodity Market Decreased in February Amid Mixed Macroeconomic Indicators
NEW YORK, March 11, 2013
NEW YORK, March 11, 2013 /PRNewswire/ -- Commodities were lower in February as
renewed uncertainty weighed on markets.
(Logo: http://photos.prnewswire.com/prnh/20091204/CSLOGO )
Nelson Louie, Global Head of Commodities in Credit Suisse's Asset Management
business, said, "Macroeconomic factors were mixed for February, though
ultimately acted as a headwind for Commodities.A broad improvement in
European manufacturing Purchasing Managers Indices was offset by a much weaker
reading in Italy, along with concerns over Italy's recent election results.
Uncertainty following the Italian parliamentary elections took center stage at
the end of the month and across commodity markets. China's official PMI was
also reported lower than expected for February. The ensuing weak sentiment
saw oil products and both base and precious metals decline. US dollar
strength driven by Euro weakness on the back of the PMI numbers and
macroeconomic concerns also weighed on commodities."
Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total
Commodity Return Strategy, added, "The rate of global growth remains a key to
commodity performance. As evidenced in February, headline risk will continue
to play a role in short-term commodity market movements. Commodities could
benefit from a rebound in global growth along with continued low interest
rates. US Federal Reserve Chairman Ben Bernanke strongly defended the US
central bank's monetary stimulus policies before Congress, easing financial
market worries over a possible early retreat from bond purchases. Commodities
have historically tended to outperform during periods of higher than expected
inflation. We believe investors will continue to derive long-term
diversification benefits that commodities provide."
The Dow Jones-UBS Commodity Index Total Return was down by 4.09% in February.
Overall, 19 out of 22 index constituents posted negative returns. Precious
Metals was the worst performing sector, down 6.25%, despite US Federal Reserve
Chairman Ben Bernanke's reaffirmation of his commitment to strong stimulus
measures. Industrial Metals decreased, down 5.63%, due to speculation over
monetary tightening in China and questions regarding surpluses of some
metals. For example, aluminum inventories in China's main trading regions are
estimated to have climbed to a record as supply growth outpaced demand in the
largest user and producer of the metal. Livestock also decreased, down 4.89%,
led by Lean Hogs, as weak packing margins continued to weigh on the sector.
Agriculture declined 3.72% as crop-friendly weather in South America and the
US Midwest improved harvest prospects for grains. Expectations of higher
global Corn supplies also weighed on the sector. Energy ended the month
lower, down 2.55%. WTI Crude Oil was the worst performing sector component,
partly as a result of the Seaway pipeline operating at reduced flow rates due
to the high inventory build-up at the Jones Creek terminal at the Gulf Coast
end of the pipeline.
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
oCollateral Yield: return earned on collateral for the futures.
As of February 28^th, 2013 the team managed approximately USD 11.3 billion in
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Certain risks relating to investing in Commodities and Commodity-Linked
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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