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 inflation.

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 natural resources.

The portfolio manager said the fund "likes" iron ore but is cautious on aluminium markets. Iron ore prices have surged 74 percent since October last year. Aluminium prices remain subdued due to a glut of supply, mainly out of China.

(Reporting by Cecile Lefort; Editing by Joseph Radford)