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Commodities Declined on Loosening Supply Fundamentals

Commodities declined on loosening supply fundamentals and improving risk appetite for gold.


The Bloomberg Commodity Index Total Return was lower for the month, with 11 of 23 constituents posting losses.

Credit Suisse Asset Management observed the following:

  • Industrial Metals declined 4.90%, led lower by Nickel, after both the London Metal Exchange and Shanghai Futures Exchange reported higher inventory levels for the month of October.
  • Precious Metals decreased 3.80% on improved risk appetite following positive US economic readings, reducing the probability of another US Federal Reserve interest rate cut.
  • Energy fell 2.57%, weighed down by Natural Gas, amid lower weather-related demand as temperatures in November as well as forecasts for early December were warmer than expected.
  • Livestock fell 2.08%, led lower by Lean Hogs, after the USDA reported the largest weekly US pork production volume in its reporting history for the week ending November 16th. Meanwhile, heightened skepticism of a partial US-China trade agreement decreased the odds for higher US pork exports to China in the coming future.
  • Agriculture eased 0.45%. While Coffee and Wheat gained on supply risks, Soybeans and its byproducts fell as a lower Brazilian Real versus the US Dollar encouraged farmers to sell their inventories more rapidly, increasing supplies in circulation.

Nelson Louie, Global Head of Commodities for Credit Suisse Asset Management, said: “Financial risk appetite improved following some optimistic trade statements from the US and Chinese administrations, although the actual execution of a partial trade agreement remains elusive thus far. There is an incentive to have one by December 15th, which is when the latest round of US tariffs on Chinese goods is set to go into effect. Commodity prices may rise on improved demand and stronger global growth prospects if a trade agreement is in place. Future developments within the Middle East will be a key driver of energy prices. By month end, OPEC+ signaled it may extend its crude oil production cut agreement past the current March 2020 expiration date at their next meeting in early December. Meanwhile, civil unrest has been increasing in Iraq and Iran. So far, these events have not materially affected prices. If tensions were to escalate further within these oil-producing nations, it could potentially result in more upside price volatility.”

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added: “Despite the continuing US-China trade war, economic readings for both countries showed slight improvements. US GDP growth for the third quarter was revised higher to 2.1% while US New Homes Sales and Durable Goods Orders readings for October came in better than expected. Meanwhile, various manufacturing PMI readings for China were all above 50 for October, indicating growth, a reversal of previous contractionary readings. It may be that accommodative policies of both central banks have allowed their economies to stabilize, at least temporarily. Both countries continue to show commitment to attempting to prevent headwinds from slowing down growth within their respective borders.”

About the Credit Suisse Total Commodity Return Strategy

Credit Suisse’s Total Commodity Return Strategy is managed by a team with over 35 years of combined 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 November 30, 2019, the Team managed approximately USD 6.3 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’). Our strategy builds on Credit Suisse’s core strengths: its position as a leading wealth manager, its specialist investment banking capabilities and its strong presence in our home market of Switzerland. We seek to follow a balanced approach to wealth management, aiming to capitalize on both the large pool of wealth within mature markets as well as the significant growth in wealth in Asia Pacific and other emerging markets, while also serving key developed markets with an emphasis on Switzerland. Credit Suisse employs approximately 47,440 people. The registered shares (CSGN) of Credit Suisse AG’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

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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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