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Media Release Commodity Markets Lower In December, Yet Fundamentals For Key Commodities Remain Strong New York, January 12, 2012 - Commodities were lower in December as macroeconomic sentiment continued to weigh on risky assets and supported a stronger US dollar.
Nelson Louie, Global Head of Commodities in Credit
Suisse's Asset Management division, said,
"Commodities were lower in December, ending an
already volatile fourth quarter. Broad-based commodities
indices essentially traded sideways in an extremely volatile
range, as investors continuously re-evaluated the
European debt crisis' potential impact on the global
economy. Despite these headwinds, the global
manufacturing PMI actually improved in December. We believe
this may reflect underlying strength in the US and key
emerging markets."
Christopher Burton, Senior Portfolio Manager for the Credit
Suisse Total Commodity Return Strategy, added,
"Fundamentals for key commodities largely remain
supportive, with generally tight inventory levels and
continued strong demand. The threat of supply shocks is
particularly acute for the crude complex and Agriculture.
While Precious Metals have lost their luster of late, demand
for currency alternatives and hard assets is likely to remain
strong amid continued loose monetary policies. We believe
investors may derive long-term diversification benefits in
conjunction with potential inflation protection through a
strategic allocation to commodities."
The Dow Jones-UBS Commodity Index Total Return was down by
3.75% in December. Overall, 12 out of 19 index constituents
decreased in value. Precious Metals was the worst performing
sector, down
11.44% for the month, as a result of strong demand for US
dollars, eroding demand for currency
alternatives. Energy ended the month down 5.58%, as Natural
Gas weighed on the sector. Warmer- than-normal temperatures
for the start of the heating season in the US increased
expectations for increasingly bloated inventory levels.
Industrial Metals were also lower, losing 4.25%, in response
to the potential impact of macroeconomic headwinds on Chinese
demand. Livestock was also lower, down
4.04% for the month, despite the release of the USDA's November Cold Storage Report which revealed the lowest level of frozen meat and poultry inventories since 2003. Agriculture was the best performing sector, up 4.03% for the month, supported by hot and dry weather in Argentina and Brazil during the critical pollination period.
The Credit Suisse Total Commodity Return Strategy group periodically produces updates on relevant industry topics. For a copy of the team's white paper, "Commodities Outlook: Increased Volatility, Increase Opportunity?", please contact your Credit Suisse Relationship Manager.
About the Credit Suisse Total Commodity Return Strategy
Credit Suisse's Total Commodity Return Strategy has been managed for 17 years and seeks to outperform the return of a commodities index, such as the Dow Jones-UBS Commodity Index Total
Media ReleaseJanuary 12, 2012
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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: