USA: Inflation Reduction Act Could Lift Corn Prices

One of U.S. President Joe Biden’s primary initiatives upon assuming office is to focus heavily on reducing carbon emissions via renewable energy. The Inflation Reduction Act will help provide funding in order to support these initiatives, which includes more ethanol usage.

“This far-reaching legislation Congress sent to the President’s desk will provide half a billion dollars for E15 and E85 infrastructure, invest a whopping $18 billion to support climate-smart agriculture practices which help reduce the carbon intensity of ethanol, reward fuels like ethanol with a new clean fuel production tax credit based on carbon intensity, establish a new sustainable aviation fuel tax credit based on carbon intensity, and give a big boost to projects which capture and sequester carbon,” said Brian Jennings, CEO of the American Coalition for Ethanol (ACE).

“While this bill does not contain everything on our wish list, it does contain some incredible incentives for farmers and ethanol producers looking to capitalize on carbon intensity and we encourage the President to sign it into law, so farmers and ethanol producers can continue innovating and playing a meaningful role in helping combat climate change,” Jennings added.

Exchange traded fund investors looking to get exposure to rising corn prices following the act becoming a law or to simply add diversification to a portfolio with commodities can take a look at ETFs from Teucrium. More specifically, they can look at the Teucrium Corn Fund (CORN B).

CORN tracks three futures contracts for corn that are traded on the Chicago Board of Trade, including 35% second to expire contracts, 30% third to expire contracts, and 35% December following the third to expire. The various contract exposures help the fund limit the negative effects of rolling contracts, especially during a market in contango.

While commodities have fallen as of late, this could be an ideal area of value for short-term traders. Should they rise again, it provides an ideal hedge against inflation.