The Varin Options Report: PIMCO: Corn as an Inflation Hedge

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Firstly, we can now understand more fully the scope of Wall Street’s involvement in our markets after seeing this morning’s PIMCO story. Here is a $1.5 Trillion portfolio that loses during inflation and buys grains (corn for now) as a hedge. Conservatively, let’s say that 1 trillion bonds are vulnerable. 100 basis points is the risk. Take that dollar loss risk. Hedge 5% in commodity long. Buy that in CRB. Take out the commodities they don’t like (they do not buy them blindly as seen in their soybean comment) and that leaves some corn to buy. How much? A lot. This is an explanation for the dramatic increase in corn open interest recently….”

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WRITTEN BY Ed Varin

Ed Varin brings over 30 years of grain market experience to HighGround. Ed has expertise in wide variety of areas such as spreads, option strategies, in depth knowledge of the cash markets both domestic and export, and fundamental research that he is able to provide. Ed has worked for several different prominent grain trading companies in his career such as Cargill where he was a cash grain trader. Having worked in both Europe and Asia, Ed’s industry experience expands across the globe which has led to Ed’s valuable relationships with industry professionals from Europe, Asia, and South America. Contact