“The market’s focus has been on risks stemming from Europe along with emerging market demand concerns,” Nelson Louie, the global head of commodities at Credit Suisse’s Asset Management firm, said. “The U.S. equity market has largely bucked these concerns and continued to move higher, choosing to focus on encouraging domestic signs. U.S. consumer confidence continued to recover, with the March reading near its highest level since 2007. The housing recovery continued to gain steam, with home prices higher for much of the country. However, commodities have been more sanguine, keeping with the broader global theme of higher risk aversion based on macroeconomic concerns.”
Energy, led by natural gas, posted the most positive performance, increasing by 6.29 percent. Weather forecasts predicted colder than normal temperatures, which contributed to the sustained demand for heating.
Precious metals increased by 0.63 percent, due in part to uncertainty regarding Cyprus’ bailout that contributed to an increased demand for gold. Industrial metals, however, fell 4.53 percent under speculation of weakened demand from China.
Agriculture fell 2.43 percent after the U.S. Department of Agriculture released its grain stocks report at the end of March, which showed elevated inventories for corn, soybeans and wheat. Livestock remained relatively unchanged, falling 0.31 percent, with live cattle falling due to lowered export expectations stemming from a Russian ban on U.S. beef exports.
“Events in the Eurozone as well as fluctuations in global growth expectations will continue to play a role in commodity market movements,” Christopher Burton, the senior portfolio manager for Credit Suisse’s Total Commodity Return Strategy, said. “However, we remain concerned with the long-term implications of ongoing monetary stimulus and its potential impact on unexpected inflation risk.”