Baxia Markets
May 21, 2021

Corn, The Unlikely Hero

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We all know that Gold is always considered a hedge against inflation, however, the current situation with Gold is a little bit complicated. So, is there anything else that can fight inflation? Why not corn? Trading in corn is also a way to protect yourself from inflation.


Recently, we have several reasons to believe that the inflation rate is going up. For example, the stimulus plan, COVID-19, and fluctuating interest rates. In combination all of these can potentially lead to high inflation. “Today, the Federal Reserve’s goal for inflation is 2%. In April, prices rose by the most in any 12-month period since 2008.” Said by The Wall Street Journal. 


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The Japan Flash Manufacturing PMI shows a lower figure than expected, the Japanese banks maybe working on the inflation rate already. Also, Australian Flash Services PMI shows a lower figure than previous data. These could be a signals of inflation, however, these two countries cannot represent all, especially the eurozone and the US. Also, CPIs may not be trustworthy sometimes. The Wall Street Journal said “But prices as measured by the CPI may not show the kind of changes you are seeing at the pump, the supermarket or brunch.” 


The bottom line is if we were to experience aggressive inflation in the next 6, 12 or 24 months, then it could be the time to invest or trade corn. Because one thing is for certain, if there is real inflation, then the prices for basic commodities will go up.


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Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. 


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