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Commodities Declined on Renewed Global Growth Uncertainty

Commodities generally declined after the spread of the novel coronavirus weighed on demand expectations for most Index constituents and renewed global growth uncertainty.


The Bloomberg Commodity Index Total Return was lower for the month, with 20 of 23 constituents posting losses.

Credit Suisse Asset Management observed the following:

  • Energy declined 14.78%, led lower by Crude Oil and petroleum products, as improved US-Iran relations reduced crude oil supply risks in the Middle East while the coronavirus outbreak disrupted manufacturing and trade activity within China, and raised concerns of supply chain disruptions.
  • Livestock decreased 10.96%, weighed down by Lean Hogs, after the USDA reported healthy pork production figures and lower-than-anticipated US pork export sales in January despite the US and China’s signing of a Phase One trade deal mid-month.
  • Industrial Metals declined 7.32% as growing cases of the coronavirus worldwide spurred fears of lower global economic activity, decreasing base metal demand expectations.
  • Agriculture fell 5.33%, led lower by Coffee, as favorable weather conditions in key production regions for Brazilian Arabica coffee raised supply forecasts, leading to estimates for a record harvest in 2020.
  • Precious Metals increased 3.22% as a new wave of uncertainty surrounding China’s economy and the ability for global growth expectations to improve supported safe haven demand for Gold and Silver.

Nelson Louie, Global Head of Commodities for Credit Suisse Asset Management, said: “Though the US and China signed a partial trade agreement on January 15th, details surrounding when and how much trade will resume remain unclear. However, the concern of food security amid China’s battle with African swine fever and a new outbreak of an avian influenza may accelerate China’s imports of US soybeans, wheat and pork. Elsewhere, eastern Africa and parts of South East Asia face a growing locust problem, which may increase the region’s demand for agricultural goods and animal protein from abroad as well. The coronavirus outbreak has weighed on growth and crude oil demand expectations as industrial and travel activity in China remain hindered. OPEC and its partners may decide to cut oil output further, though their impact depends on how much demand is lost as well as the details on the timing and types of any cuts. Meanwhile, the potential for supply shocks in the Middle East remains as the US continues to enforce its sanctions on Iran, and most of Libya’s oil exports have been disrupted due to continued internal conflicts.”

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added: “The US Federal Reserve kept short-term interest rates steady after its latest meeting in January, noting ”cautious optimism“ towards global growth expectations. However, there remains uncertainty on how the coronavirus outbreak will impact the global economy and if it will limit progress made with the Phase One trade deal as China’s economy is weakened and constrained. The People’s Bank of China already announced plans to inject liquidity into its markets to make up for the economic shortfall caused by the contagious virus. These actions demonstrate how carefully central banks are monitoring their respective economies and their willingness to act to support long-term growth.”

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 January 31, 2020, the Team managed approximately USD 6.4 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

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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