Commodity Online With several commodities experiencing declining spot prices during February and roll returns also generally working against commodity indices, the month ended in the red overall. Cross-commodity correlation and volatility also trended lower, according to Merrill Lynch report. The MLCX TR index posted -4.86%, S&P GSCI TR fell -6.10% and the DJ-AIG TR index stopped at -4.43%. Meanwhile, the ML US Broad Bond Market index yielded -0.45% and the S&P 500 TR fell -10.65%. Energy returns down, despite more stable crude oil prices In recent months, NYMEX WTI crude oil prices dipped below $35/bbl and tradedat levels last seen in 2004. Although spot oil prices did not decline further in February, the cost of carry resulted in a loss for indices holding oil futures. In combination with falling gas oil and US nat gas prices, the MLCX Energy TR index ended up the month returning -5.62%. In this note we explain how longerdated rolls and call overwriting strategies will likely continue to outperform. Pullback in grains & softs, but cattle posts positive returns The grains and softs sectors declined in value in the month of February, with the ML Grains TR index posting -9.51% returns and the ML Softs TR index returning -5.02%. In contrast, the ML Livestock TR index stayed broadly flat at -0.46%, with cattle posting positive returns in the month and hogs posting a negative figure. Both base and precious metals returns up in February Both base and precious metals yielded a positive return in February. Among the industrial metals, copper and zinc led the sector. Meanwhile, both gold and silver appreciated in value. Net, the ML Precious Metals TR index increased by 1.91% while the ML Industrial Metals TR index posted a return of 2.91% in February, Merill Lynch said in its report.

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