The increased use of biofuels should generate bullish vibes for agricultural commodities investors. More recently, plans for a biofuel plant in California should help spur more investors to look at ag commodities more closely. And that’s not only as a portfolio diversification tool, but for growth.
California has one of the more stringent laws and ambitious plans when it comes to reducing carbon emissions. Given this, the use of a biofuel plant could spur other states to follow suit. And that could increase demand for agricultural commodities like soybean and corn. Soybean prices already reacted to the upside on news of the biofuel plant.
“Soybean oil prices rose in Chicago amid speculation that a new biofuels plant in California has received the green light to start operating in a few weeks,” a Bloomberg report confirmed.
“The plant — a former crude oil refinery — will use waste oils, fats, greases and vegetable oils to produce an initial 800 million gallons of renewable fuels per year, including renewable diesel, renewable gasoline and sustainable aviation fuel, according to the company,” the report added.
For further upside ahead, prospective soybean investors may want to take a look at the Teucrium Soybean Fund (SOYB ). The fund provides similar exposure to what investors could obtain by trading in soybean futures contracts. This offers short-term traders or longer-term buy-and-hold investors who want to diversify their current portfolios ingress to soybean price exposure.
Wheat Exports Rise in Russia
In addition to the development of clean energy technology, geopolitical forces also weigh on ag commodities. In terms of wheat prices, Russian exports have been on the rise as the effects of supply since the invasion of Ukraine are slowly dissipating.
“Russian wheat exports have become more diversified through the first half of 2023/24 compared to the same period of the previous year, indicating that the country has retaken its status as the cheapest origin globally, while concerns over potential sanctions have dwindled,” according to a Fastmarkets AGRICENSUS report.
If supply constraints are alleviated, traders may want to keep an eye on the Teucrium Wheat Fund (WEAT ). Price dips could offer an area of value should wheat prices reverse their current trend and move higher.
The fund offers an easy way for investors to gain exposure to the price of wheat futures. For short-term traders, it offers the ability to get exposure to wheat futures without having a margin account. For long-term buy-and-hold investors, the grain can also serve as an inflation hedge as consumer prices rise.
For more news, information, and analysis, visit the Commodities Channel.
