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Commodities: Dismay in May all over again

London, 18 May 2012

For most commodity investors, recent market declines are a bit of deja vu all over again as volatility increases on global economic concerns subsequent to a period of increasing petroleum prices. In May of 2011, the S&P GSCI declined 6.89%. As of May 17 2012, the dismay this month has been nearly 8%. "Retreating petroleum prices have led commodity declines in May but industrial metals have been the weakest sector over the past 12-months, offering little endorsement of earlier economic optimism," according to Mike McGlone, Senior Director, Commodity Indexing at S&P Indices.

Declining Tide: Global economic slowdown risks and accelerating European recession fears continued to weigh on commodities in May, as measured by the 7.96% month-to-date (MTD) decline in the S&P GSCI as of May 17.  The S&P GSCI has moved into negative territory in 2012 and equities have declined, as measured by the 1.78% YTD decline in the spot S&P Euro 350.  Dollar based commodities have also have suffered as the U.S. dollar has strengthened in May, as measured by the 3.46% increase in the U.S. Dollar index.  Petroleum, previously the stalwart sector, has been the biggest drag on S&P GSCI returns this month, as measured by the MTD decline of 10.45% in the S&P GSCI Petroleum index.

 

S&P GSCI Petroleum and Industrial Metals Indices:  Dec. 2010 – May, 17 2012

Source: Standard & Poor’s, Data as of May 17, 2012.

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