Credit Suisse Releases Outlook on Commodities

Global efforts to increase stability and liquidity within financial markets, in combination with recent production cutback are leading many to believe that 2009 could be a more favorable year for commodities, according to a Credit Suisse report. “Based on the expectation of ongoing production decreases across core commodities in the energy and industrial metal sectors, we believe that the current market may present an attractive entry point for investors,” said Andrew Karsh, co-lead portfolio manager for the Credit Suisse Total Commodity Return Strategy, in a press release

“It will be interesting to see if the recent liquidity injected into the global financial markets results in higher inflation. Given the historical positive correlation between unexpected inflation and commodities, this could be another source of gains for commodities investors in 2009,” said Chris Burton, co-lead portfolio manager, in the release.

Despite overall losses in December, several commodities posted healthy returns for the month. Nickel was the months strongest performer, gaining 14.20%, as improvement within the equity markets began generating optimism for industrial consumption in 2009. Corn also experienced returns of 11.28% due to dry growing weather in Brazil and Argentina. Crude oil suffered the most, falling 19.29%, due to a surplus in inventory.