Natural gas and grain prices rose in July, the latter because of deteriorating crop conditions in the US Midwest, according to Credit Suisse.

Nelson Louie, global had of commodities in Credit Suisse’s Asset Management division, believes weather conditions will continue to drive natural gas and grain markets in the near future.

The Dow Jones-UBS Commodity Index Total Return was up by 6.47 per cent in July. Overall, 14 out of 20 index constituents posted positive returns, and agriculture was the best performing sector with a 14.29 per cent for the month.

"Meanwhile, more economically sensitive commodities, like base metals, will continue to be focused on macroeconomic factors," Louie said. "Economic readings for the US and China were mixed and suggested slowing growth. This, along with continued economic malaise in much of Europe, suggests further monetary easing measures may be likely.”

At the same time, Christopher Burton, senior portfolio manager for the Credit Suisse Total Commodity Return Strategy, highlighted that inflation expectations remain anchored near historic levels and that markets are more focused on weak economic conditions than on the inflationary impact of prolonged and loose monetary policy.

"This may lead to inflation overshooting expectations if economic activity begins to pick up more robustly than expected," Burton said. "Commodities have historically tended to outperform during periods of higher than expected inflation. Traditional asset classes, including equities and fixed income, may be impacted differently by these risks. This should continue to drive short term cross-asset correlations lower. We believe investors will continue to benefit from the long-term diversification benefits that commodities provide.”