August 15, 2011 

US commodities post gains in July

Despite prolonged uncertainty surrounding the European debt crisis and the lack of resolution over the US debt limit expansion, commodities in the US market posted broad-based gains in July.

Nelson Louie, Global Head of Commodities at Credit Suisse Asset Management, said, "Commodities posted broad-based gains in July, outperforming equities, due to a combination of demand for hard assets and generally tight supply conditions.  However, prolonged uncertainty surrounding the European debt crisis and US monetary and fiscal policy has contributed to increased volatility in commodities markets and widespread risk aversion.  Given the disappointing economic readings in July adding to suspicions that economic growth may be slowing in the OECD, we believe interest rates in the US will continue to remain exceptionally low for an extended period of time and overall monetary policy will likely remain accommodative." 

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, "In the long term, we believe commodities will continue to offer value for investors despite risk aversion and potential volatility across capital and commodity markets.  Political disagreements and elevated government debt levels in Europe and the US pose risks to derailing the global economic recovery.  The uncertainty surrounding this can impact traditional asset classes and commodities differently.  Therefore, we believe investors will continue to benefit from the diversification benefits that commodities provide."

The Dow Jones-UBS Commodity Index Total Return was up by 2.96% in July.  Overall, 15 out of 19 index constituents increased in value. 

Livestock ended the month up by 3.15%, led by Lean Hogs as hot weather in the US slowed hog marketing at a time when pork plants are working to supply an active export market.  Agriculture also posted positive returns, up 2.79% for July, supported by strong demand following a sharp reduction in prices and potential weather damage in the US. Energy was the only sector to post a loss for the month, losing 0.83% in July.