This morning on The Call @ Hedgeye, Industrials analyst Jay Van Sciver and Energy analyst Fernando Valle highlighted a potential game-changer for the agriculture sector: California's consideration of limiting seed oils in biodiesel production. This would be incredibly bearish for the agriculture complex, according to the analysts.
“Biofuels are incredibly important markets for ag,” Van Sciver emphasized. “It would be a meaningful cap on the potential growth of soybeans going into renewable fuel applications.”
Valle added, “Once it starts to either become too difficult for the industry to survive or too expensive for consumers and for governments to subsidize, they’ll start cutting the incentives. It’s the cycle that happens with all these biofuels because they’re not good enough to stand on their own.”
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