Are all commodity investments subject to high volatility?
GZ: There is another way of trading commodities that is not price dependent. Commodities have life cyclesthink of corn all the way from the seed being planted to when it becomes ethanol or food and is delivered to end users. This life cycle is generally very inefficient and specialists trade different stages of the life cycle to take advantage of inefficiencies. Our focus is on the inefficiencies rather than price dependency. We look to where the inefficiencies are and how they will be affected by macro trends. That way we can capture much of the upside but protect ourselves against downside price movements. Many investors don’t understand the inefficiencies that drive commodity trading opportunities, such as physical and curve constraints, so instead they go for index investments. OFI: Are there many inefficiencies at any one time? GZ: The beauty of commodities is that there are many related but distinct markets. Oil in the US is different from oil in Europe. High protein wheat is not
