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Slight Commodity Losses Overshadow Modest Gains

May 15, 2023

Read Time 2 MIN

April showed a slight downturn for commodities. The gains of the agriculture and livestock sectors were not enough to offset industrial metals, the weakest sector.

Macro Outlook: Economic Growth Concerns Triggered Marginal Commodity Losses

Lingering economic growth concerns triggered by the March regional banking crisis and bank failures led to small losses for most commodity indexes. The UBS Constant Maturity Commodity Index (CMCI) fell 0.69%, while Bloomberg Commodity Index (BCOM) fell 0.75% in April.

Sector Review: Agriculture Sector Benefitted From Increased Sugar Prices

Industrial metals was the weakest sector during the month, falling by over 3%. The banking failures have investors worried about a credit crunch, leading to a weaker economy and falling demand for industrial metals. Zinc and copper each fell around 8%, contributing to greater losses for the sector overall.

There were modest declines in the energy sector, which fell less than 1%. WTI Crude Oil and Brent Crude Oil were slightly higher in April but products and natural gas fell, which offset the small gains of crude oil.

The agriculture and livestock sectors were all slightly higher in April but not enough to offset the losses in the industrial metals sector. Strong gains in sugar prices (an increase of +20% in April and +50% year-to-date), coffee, and cocoa offset losses in corn. Wheat contributed to the higher agricultural sector returns. The livestock sector gained 1% during the month led by a 1.8% rise in cattle prices.

The precious metals sector gained the most during the month with a 1.6% return. Gold increased modestly by 1%, while silver prices jumped 4%.

Performance by Sector Components

Performance by Sector Components

Source: Bloomberg, April 2023. Past performance is no guarantee of future results. Index performance is not representative of fund performance. It is not possible to invest directly in an index.

Learn more about the VanEck CM Commodity Index Fund, which seeks to track, before fees and expenses, the CMCI.

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