London, 8 January 2011

The Barclays Capital Commodity Research Index (BCRI), launched at the start of December, gained 9.7% on the month, outperforming the neutral portfolio by 0.1%.

• Agriculture was the strongest performing commodity sector in December due to a combination of factors including weather disruptions and strong emerging market demand. We believe agriculture will continue to outperform other commodity sectors in January and consequently we are overweighting this sector relative to all others.

• Within the agriculture sector, corn remains our favoured exposure. Corn continues to benefit from a combination of highly supportive fundamentals: tight supply and low stocks, record-high US ethanol production, weather disruptions linked to the effects of La Nina on Southern Hemisphere crops, and strong Chinese imports.

• Base metals fundamentals look the strongest after agriculture. They are the commodities most exposed to economic recovery and we expect the sector as a whole to benefit from emerging market growth and strong construction in China, whilst copper and tin will receive extra support from exceptionally tight supplies.

• Within the energy sector, while we remain positive on crude oil market fundamentals, with the upside surprise in global oil demand continuing, the pace of non-OPEC supply growth slowly reducing and the rapid erosion of inventories continuing apace, prices have already risen strongly over the course of the past month. At these levels, while we think downside risk is small, the upside also looks limited for the next month and prices are likely to be in consolidation mode, in our view.

Ends --

Kevin Norrish, Barclays Capital. For more see:

www.barcap.com