April 2012 Commodities Commentary: Dow Jones-UBS Commodity Indexes Down On Decreased Expectations For Some Consumer Consumption, By Christine Marie Nielsen

The Dow Jones-UBS Commodity Index was down 0.43% for the month of April as expectations for consumer consumption in some products fell. The three most significant downside performing single commodity indexes were orange juice, sugar and lean hogs, which ended the month down 13.99%, 11.95%, and 4.95% respectively.

Orange-juice futures fell to a 17-month low in April after the U.S. Department of Agriculture (USDA) indicated consumer consumption of the product has dwindled. U.S. consumption has fallen nearly 11% over the last year. Further, speculators unwound bullish bets. Net long positions fell to 5,879 futures and options contracts on April 3 from 8,764 on March 20.

Thoughts of a glut of supply in the sugar market caused product prices to fall. According to the USDA global sugar production will increase 4.2% to 168.2 million tons this year, compared with a 2.1% gain in consumption to 160 million tons.

Lean hog prices declined on weak wholesale pork prices. Early spring is viewed as a key time for this market, as hog futures contracts tend to rally as food service operators and retailers prepare for the start of the grilling season.

The Dow Jones-UBS Single Commodity Indexes for soybean meal, soybean and lead had the strongest gains with month-end returns of 11.46%, 7.09% and 5.63%, respectively.

In the course of the month, the price of soybeans rose to the highest level since July 2008—crossing the threshold of $15. According to a research report released by Commerzbank on Apr. 30, a renewed expansion of speculative net long positions in this oilseed was indicated. According to Commerzbank, an increase by 13.7 thousand to a new record high of around 231.8 thousand contracts was the 12th weekly rise in a row, and showed that "money managers have been largely responsible for the price increase we have seen in recent weeks."

Lead futures gained in April as the product saw a pick up in demand from battery makers.

Year to date, the Dow Jones-UBS Commodity Index is up 0.43% with the Dow Jones-UBS Soybean Meal Sub-Index posting the highest gain of 37.37% so far in 2012. Dow Jones-UBS Natural Gas Sub-Index has the most significant downside YTD performance, down 36.73%.