Ambitious Plans for Biofuel Use Could Boost This ETF

Whether on ground, air, or water, vehicles could be increasingly running on agricultural commodities or more specifically, biofuels. The International Energy Agency (IEA) is already expecting a profound increase in the use of biofuels in 10 years as the transitional energy era continues to gain momentum.

“The International Energy Agency (IEA) expects the use of biofuels to increase significantly by the end of the decade, with a much bigger proportion of these fuels being produced using waste, residues and non-food crops, thereby making them more sustainable,” an article mentioned. “Based on ambitious climate pledges in the transport industry, companies must invest heavily in biofuels to help researchers make major strides in the development of low-carbon fuels that can be used in trucks, ships and planes.”

Demand for biofuels is already showing itself in the data. While the 2020 pandemic certainly threw a speed bump in front of rising demand, the upward trajectory has resumed in subsequent years to exceed numbers prior to the pandemic.

“The demand for biofuel rose to 4.3 exajoules (EJ) in 2022, surpassing pre-pandemic levels,” the article added. “To meet net-zero emissions aims by 2050, the global production of biofuel needs to increase to 10 EJ by 2030, requiring an average growth of around 11 percent per year, according to the IEA.”

An Ag Commodity Fund-of-Funds ETF

Investors looking to capitalize on this growth exposure can use the Teucrium Agricultural Fund (TAGS). Given its low 0.13% expense ratio, it offers a compelling option. It is an ideal way for ingress into agricultural investing by way of the unique fund-of-funds structure inherent in TAGS.

Because ag commodities can offer uncorrelated exposure to the broad market, TAGS offers a perfect complement to a traditional 60/40 stock/bond portfolio for diversification. And it’s all in the convenience of one dynamic fund. A combination of Teucrium funds add exposure to corn, wheat, soybeans, and sugar.

Short- and  long-term investors can use TAGS or the individual funds for a more focused, concentrated approach in specific commodities. Long-term traders can take advantage of the diversification benefits. And short-term traders can use TAGS to play the volatility of ag commodities prices..

The funds featured in TAGS:

For more news, information, and analysis, visit the Commodities Channel.