The S&P GSCI Agriculture is the best performing sector MTD, up 1.3%. This is mainly due to the S&P GSCI Cotton, which gained 5.0% this week, bringing its YTD return up to 19.5%. It is the best performing commodity in the index this year, mainly driven by solid mill buying and U.S. exports. The U.S. Department of Agriculture (USDA) has forecast a record global surplus, but most of those reserves are expected to be within China’s stockpiles and unavailable to the global marketplace. The International Cotton Advisory Committee (ICAC) stated China’s cotton reserve has continued to expand at “a ferocious rate” and is projected to reach 8 million metric tons (36.74 million bales) by the end of the 2012-13 marketing year.
The S&P GSCI Corn and S&P GSCI Wheat have also been strong performers recently. A weaker U.S. dollar supported both of these grains but the S&P GSCI Corn, up 3.7% for the week and 1.9% MTD, was driven by tight old-crop supplies, while the S&P GSCI Wheat rose 4.2% this week and 1.4% MTD, driven by high demand from livestock feeders.
Reported sluggish economic signals underpinning the International Energy Agency’s (IEA) projection of 820 kb/d annual growth in global oil demand for 2013 is less than the 1.4 mb/d growth average for non-recessionary years. This drove the S&P GSCI Brent Oil down 1.2% this week, contributing to the S&P GSCI Energy sector loss of 12 basis points this month. However, the sector is still positive 1.0% YTD and is the only one up in the index for the year. Supporting the S&P GSCI Energy is the S&P GSCI Natural Gas, which is up 6.2% this week, bringing the month’s return to 9.2% and YTD to 10.9%. Continued larger-than-expected inventory drawdowns on cold weather and above-average nuclear power plant outages kept the momentum to the upside.