Commodity Market Decreased in June Amid Continued Slowing Growth Signals from
NEW YORK, July 8, 2013
NEW YORK, July 8, 2013 /PRNewswire/ --Commodities were lower in June as
uncertainty surrounding the future of the global economic recovery remained
(Logo: http://photos.prnewswire.com/prnh/20091204/CSLOGO )
Nelson Louie, Global Head of Commodities in Credit Suisse's Asset Management
business, said, "Macroeconomic news out of China weighed on commodities in
June. With China now shifting to a more moderate rate of growth and modestly
improving conditions elsewhere, it is likely that supply divergences are
playing an increasing role at a time when the higher correlation observed
between other asset classes and commodities since 2008 has begun to
normalize. This may signal a return to a more fundamentally-driven market.
Within the current trend, the pace of supply growth is likely to remain the
key factor in driving commodity returns."
Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total
Commodity Return Strategy, added, "Markets continue to be caught between good
economic news being positive, indicating that the recovery is gaining
traction, or good economic news being negative as it may mean monetary policy
will tighten. While the pace of these programs may eventually soften, we
believe that most major central banks will continue to err on the side of
providing more stimulus until the economy improves rather than risk tightening
too much. In the meantime, while inflation continues to be muted, the risk of
unexpected inflation remains elevated."
The Dow Jones-UBS Commodity Index Total Return decreased 4.71% in June.
Overall, 15 out of 22 index constituents posted negative returns. Precious
Metals was the worst performing sector, down 12.27%, on persistent worries
over the US Federal Reserve's plan to wind down its monetary stimulus program
and the rally of the US dollar in the second half of the month. Industrial
Metals declined 7.11% as a preliminary survey showed that China's factory
activity weakened to a nine-month low in June as demand faltered. This may
heighten risks that a second quarter slowdown could be sharper than expected
and increase pressure on the Chinese central bank to loosen policy.
Agriculture ended the month lower, down 4.16%, pressured by
higher-than-expected ending corn stocks and further data showing
larger-than-expected US acreages planted despite the earlier weather related
planting delays. News that Australia's new-crop wheat production increased
15% from a year ago added to concerns over larger global supplies. Australia
is one of the world's largest wheat exporters. Energy decreased 2.55%, led by
Natural Gas, following the higher-than-consensus storage injections in June as
reported by the US Energy Information Administration. Livestock was the best
performing sector, up 3.10%, with both Live Cattle and Lean Hogs ending the
month higher. The USDA lowered its forecast for 2013 pork production and
reported lower feeder cattle placements for May than a year ago.
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 June 30^th, 2013 the team managed approximately USD 10.3 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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