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SYDNEY Feb 10 Pacific Management Investment Co
(Pimco), one of the world's largest bond funds, believes corn
prices will outperform soybeans and is cautious about aluminium
The California-based fund management group, which manages
$1.5 trillion of assets, or more than the annual output of the
Australian economy, uses commodities to protect against
There is typically a close relationship between the value of
natural resources and inflation over time.
"We think that soybean prices will decline versus the prices
of corn based on our valuations and the fact that we'll probably
see a really big switch of acreage in soybean planting in the
U.S. this year," Nic Johnson, portfolio manager of Pimco's $12
billion commodity fund, told Reuters in an interview.
In December, the U.S. Department of Agriculture forecast a
reduction of 4.5 million planted corn acres for 2017.
California-based Johnson said PIMCO was broadly neutral on
commodities, but flagged potential price volatility should a
border tax adjustment policy floated by Republicans in the
United States go ahead.
"We think commodity prices outside the U.S. could go down
and commodity prices within the U.S. could go up," said Johnson,
seeing a potential decline in prices of global oil
versus U.S. crude.
A border tax adjustment would likely increase the cost of
imports into the U.S. and could encourage domestic production of
The portfolio manager said the fund "likes" iron ore but is
cautious on aluminium markets. Iron ore prices MYSTL-RIIOI-IMP
have surged 74 percent since October last year. Aluminium prices
remain subdued due to a glut of supply, mainly out of
(Reporting by Cecile Lefort; Editing by Joseph Radford)