The New York Board of Trade introduced a futures contract for sugar-derived ethanol Friday and is introducing an options contract today. (Story.) The Chicago Board of Trade (CBOT) plans to introduce a futures contract for corn-based ethanol late this year.
Futures trading in ethanol, derived in the United States primarily from Midwest corn, could reduce cost through more efficient hedging and pricing.
A recent spike in U.S. ethanol demand has triggered price hikes and fluctuations, creating an industry clamor for the futures contract, a tool that also could reduce volatility.
Demand, driven by use of ethanol as a replacement for MTBE and by the high-cost of petroleum, should continue to rise.