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Commodities Declined Amid Shifting Supply and Demand Expectations


Commodities declined in March amid shifting supply and demand expectations across multiple sectors.

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

Credit Suisse Asset Management observed the following:

  • Livestock declined 7.07%, led lower by Live Cattle, after the USDA reported higher beef production in March compared to the year prior as well as higher-than-expected feedlot placements in February, increasing supply expectations.
  • Industrial Metals decreased 4.36% as US-imposed tariffs on steel and aluminum products along with a cooling Chinese housing market reduced demand expectations for base metals.
  • Agriculture was 2.81% lower. Kansas City Wheat and Chicago Wheat both fell as much needed rainfall in the US Grain Belt relieved parched crops, improving yield expectations.
  • Precious Metals increased 0.15%, led higher by Gold, after trade tensions between the US and China rose, raising safe haven demand for the metal.
  • Energy rose 4.87%, led higher by crude oil and petroleum products, as new appointments by the US Administration increased the odds of Iran and Venezuela facing more US sanctions, potentially reducing the amount of crude oil supply in circulation.

Nelson Louie, Global Head of Commodities for Credit Suisse Asset Management, said: “March began with the US government announcing across-the-board tariffs on steel and aluminum product imports, upsetting many countries, including long-standing trading partners such as the European Union. Though the US administration eventually made exceptions, retaliatory actions by targeted nations are largely expected. China already announced plans to impose tariffs on US pork, with expectations of more levies to come. While the trade actions intend to safeguard their respective nations, the escalating tensions may have the unintended effect of hurting specific producers, such as US soybean farmers. Further escalation of trade tensions may have the potential to affect growth.”

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added: “In March, on the back of a stronger US economy, the Fed raised rates and also indicated it may increase the pace of interest rate hikes to prevent the economy from overheating as signs of inflation continue to emerge. The ECB announced plans to begin to tighten its monetary policies on the back of improving labor markets and strengthening economic growth. As China and Japan’s core CPI readings for February reached new year-over-year highs, increasing industrial output may serve as a sign of future inflationary pressures. Increasing coordination in global growth as well as rising inflationary pressures may be more supportive for commodities as an asset class.”

About the Credit Suisse Total Commodity Return Strategy

Credit Suisse’s Total Commodity Return Strategy is managed by a team with over 32 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 March 31, 2018, the Team managed approximately USD 8.8 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 about 50 countries worldwide. The group employs approximately 46,840 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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