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Commodities Increased on Strong Demand

New York – WEBWIRE

Commodities increased in July due to strong petroleum product demand and improved growth prospects from China, according to Credit Suisse Asset Management.

The Bloomberg Commodity Index Total Return performance was positive for the month, with 15 out of 22 Index constituents posting gains.

Credit Suisse Asset Management observed the following:

  • Energy increased 4.56% with crude oil and petroleum products rising on strong demand and some signs of US producers reducing capital expenditures.
  • Industrial Metals rose 4.12% after key economic indicators in China, including second quarter GDP growth and industrial output, came in above expectations.
  • Precious Metals gained 1.75% as the US Dollar weakened following reduced expectations regarding the pace of monetary policy tightening.  
  • Agriculture slightly increased 0.85%, led higher by Coffee and Sugar as the Brazilian Real strengthened versus the US Dollar.
  • Livestock declined 4.85%. Lean Hogs decreased after the USDA reported June inventories hit an all-time record high since the 1960s.

Nelson Louie, Global Head of Commodities for Credit Suisse Asset Management, said: “The expectations for OPEC’s success to bring down global inventories with output cuts diminished as compliance among participating nations began to slip and as other countries continued to grow production. However, US producer cuts to capital expenditures along with stronger-than-expected demand for petroleum products outweighed negative sentiment towards OPEC. In Agriculture, markets continue to watch weather conditions as August is a key production stage for soybeans. Unexpected weather shocks may damage the US crop and lead to a lackluster production year. Base metals demand continued to be linked to China’s economy and its interest of implementing stricter environmental standards, which has recently led to a ban on various copper scrap metal imports beginning at the end of 2018. This may cause China to import more refined copper.”

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added: “Economic growth continued to improve within key developed and emerging market nations. Japanese manufacturers’ confidence rose while China’s second quarter GDP came in stronger-thanexpected. The Eurozone’s June Purchasing Managers Index reading remained in expansionary territory. Lastly, US labor markets improved as demonstrated by a positive June jobs report and growing participation in the workforce. June manufacturing data also came in higher versus May’s data. These metrics have encouraged the Fed to again signal a possible reduction in their balance sheet in September, though they remained focused on lower-than-desired inflation readings. The European Central Bank is showing signs of potentially becoming less accommodative if growth indicators continue to improve. Overall, major central banks continue to remain accommodative but are also mulling over when a potential tightening can take place. The timing and speed of such tightening may lead to periods of higher-than-unexpected inflation. This may be supportive for investments in commodities as a strategic diversifier in a well-diversified portfolio.”

About the Credit Suisse Total Commodity Return Strategy

Credit Suisse’s Total Commodity Return Strategy is managed by a team with over 30 years of experience, and seeks to outperform the return of a commodities index, such as the Bloomberg 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:  Spot Return: price return on specified commodity futures contracts;  Roll Yield: impact due to migration of futures positions from near to far contracts; and  Collateral Yield: return earned on collateral for the futures. As of July 31, 2017, the Team managed approximately USD 8.6 billion in assets globally.

Credit Suisse AG

Credit Suisse AG is one of the world’s leading financial services providers and is part of the Credit Suisse group of companies (referred to here as ’Credit Suisse’). As an integrated bank, Credit Suisse offers clients its combined expertise in the areas of private banking, investment banking and asset management. Credit Suisse provides advisory services, comprehensive solutions and innovative products to companies, institutional clients and high-net-worth private clients globally, as well as to retail clients in Switzerland. Credit Suisse is headquartered in Zurich and operates in over 50 countries worldwide. The group employs approximately 46,230 people. The registered shares (CSGN) of Credit Suisse’s parent company, Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares (CS), in New York. Further information about Credit Suisse can be found at

Important Legal Information

This document was produced by and the opinions expressed are those of Credit Suisse as of the date of writing and are subject to change. It has been prepared solely for information purposes and for the use of the recipient. It does not constitute an offer or an invitation by or on behalf of Credit Suisse to any person to buy or sell any security. Any reference to past performance is not necessarily a guide to the future. The information and analysis contained in this publication have been compiled or arrived at from sources believed to be reliable but Credit Suisse does not make any representation as to their accuracy or completeness and does not accept liability for any loss arising from the use hereof.

Certain information contained in this document constitutes “Forward-Looking Statements” (including observations about markets and industry and regulatory trends as of the original date of this document), which can be identified by the use of forward-looking terminology such as “may”, “will”, “should”, “expect”, “anticipate”, “target”, “project”, “estimate”, “intend”, “continue” or “believe”, or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties beyond our control, actual events, results or performance may differ materially from those reflected or contemplated in such forward-looking statements. Readers are cautioned not to place undue reliance on such statements. Credit Suisse has no obligation to update any of the forward-looking statements in this document.

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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