Commodity Market Declined in May as Supply Risks Subsided

          Commodity Market Declined in May as Supply Risks Subsided

PR Newswire

NEW YORK, June 10, 2014

NEW YORK, June 10, 2014 /PRNewswire/ --Commodities were lower in May as some
immediate supply concerns eased.

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Nelson Louie, Global Head of Commodities in Credit Suisse's Asset Management
business, said, "While commodities declined in May as some of the supply
concerns that impacted key commodities in the first quarter subsided, we
believe that the potential for production risks continue to exist. Weather
may continue to play a key role driving commodity returns in 2014,
particularly in Energy and Agriculture, should extreme patterns continue. For
example, the fundamentals for natural gas are stronger than they have been in
the last five years following an extraordinarily cold winter for much of the
US, leading to robust heating demand and causing supply and transportation
hurdles. To reach normal US inventory levels ahead of next winter would
require the largest ever storage injection over a six-month period. At the
same time, a hot summer could potentially increase power generation due to
cooling demand."

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total
Commodity Return Strategy, added, "The US economy contracted for the first
time in three years in the first quarter as it buckled under a severe winter,
but there are signs it has rebounded and is on track to recover solidly from
the setback in the first quarter. Recent data shows a rebound in residential
construction, and leading indicators continue to signal a pick-up in corporate
investment. The Federal Reserve will likely continue to reduce its monthly
asset purchases and wind down its quantitative easing program, but risks
continue to be skewed to US economic growth coming in stronger than
anticipated going forward. Correlations between commodities and traditional
asset classes have stayed low as conditions have normalized. We continue to
expect commodities to provide valuable diversification benefits going

The Dow Jones-UBS Commodity Index Total Return declined 2.87% in May.
Overall, 13 out of 22 index constituents posted negative returns. Agriculture
was the worst performing sector, down 7.18%. In addition to Coffee and Wheat,
Corn also declined due to expectations of increased South American exports and
higher 2014 ending stocks in China. Precious Metals decreased 3.55% as
positive sentiment led to record-high US equity valuations, declining
volatility across markets, and a further reduction in the safe-haven appeal of
gold. Lower physical gold demand out of India and China also weighed on the
sector. Livestock ended the month 2.03% lower after the World Organisation
for Animal Health stated impacts from the PED virus may ease as the US hog
population develops immunity to the disease. Energy declined 0.66%, led lower
by Natural Gas. Energy Information Administration storage data revealed a
narrowing supply deficit compared to the five year average. Industrial Metals
was the best performing sector, up 2.71%, with all sector components posting
positive returns.

About the Credit Suisse Total Commodity Return Strategy
Credit Suisse's Total Commodity Return Strategy has been managed for over 19
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 May 31, 2014, the Team managed approximately USD 11.5 billion in assets

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Certain risks relating to investing in Commodities and
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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