Commodities decreased in February, largely driven by supply surpluses, according to Credit Suisse Asset Management.

The Bloomberg Commodity Index Total Return performance was negative for the month, with 14 out of 22 Index constituents yielding losses.

Credit Suisse Asset Management observed the following:

• Energy was the worst performing sector, down 9.27%. Natural Gas declined the most as above-average U.S. temperatures reduced heating demand and increased the likelihood that inventories would remain excessive.

• Agriculture declined 2.78%, led lower by Cotton, amid expectations that the Chinese government may increase sales from its large stockpiles. Chicago Wheat was the worst performer among grains as the strong U.S. Dollar incentivized exports out of Argentina and Europe rather than from the United States.

• Livestock increased 0.93%. Live Cattle gained the most as the U.S. Department of Agriculture ("USDA") reported lower production of beef during the second half of the month.

• Industrial Metals ended 3.35% higher, led by Zinc, due to declining inventories as mine closures and production cuts from large smelters have helped to reduce excess inventories. In addition, ongoing stimulus measures from the People's Bank of China increased China's economic growth outlook, supporting demand expectations for base metals broadly. 

• Precious Metals was the best performing sector, up 8.98%. Gold gained the most amid demand for safe haven assets after economic data released at the beginning of the month showed that the services sector grew at a slower-than-expected pace, while manufacturing data again disappointed.

Nelson Louie, Global Head of Commodities for Credit Suisse Asset Management, said: "Supply concerns in crude oil and petroleum products continued to persist throughout the month. Despite current high levels of inventories, expectations increased that the market will be better balanced between supply and demand going forward. Throughout the first two months of the year, many leading U.S. oil exploration companies and producers continued to announce significant capital expenditure cuts alongside other measures. Elsewhere, discussions between Saudi Arabia, other OPEC members, and Russia ended with agreement to maintain production at current levels. The gesture will have little immediate impact given that it was preliminary and unbinding and as the countries involved are already producing at high capacity levels. However, the willingness of these countries to come together to even discuss possible output cuts may potentially open up avenues for more concrete reductions in the near future." 

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, "Ahead of the recent Shanghai G-20 meeting, the governor of the People's Bank of China reiterated the scope of its monetary policy stance, citing further room to implement monetary tools and currency measures if necessary. Global central banks in Europe and Asia have also confirmed their commitment to utilizing the policy measures necessary to revive growth in their economies, which may support global commodities demand. U.S. inflation expectations declined to very low levels alongside the rise in global inventories. The Federal Reserve may remain on a slow tightening course if weak economic data continues to increase U.S. economic growth concerns. Amid loosening monetary policy measures worldwide, exposure to commodities as an asset class may help to reduce overall portfolio risk in the event of any unforeseen increase in inflation."