Brazil to launch US $ ethanol futures contract

26 March 2007 23:07  [Source: ICIS news]

HOUSTON (ICIS news)--Brazil’s futures exchange (BM&F) said on Monday it would launch an ethanol contract quoted in US dollars to meet growing interest for the Brazilian product by foreign investors.

The new contract will debut on 24 April pending regulatory approvals, a BM&F spokesperson said during a telephone interview.

The contract will use the Santos port as a delivery reference price. Santos FOB (free on board) is normally used by Brazilian ethanol makers as a benchmark for export prices.

BM&F’s current ethanol contract (ALA) is quoted in Brazilian reais (R) and uses the town of Paulínia, 120 kilometres west of Sao Paulo city, as a delivery reference.

The front-month ALA April contract ended on Friday at R1,053/cubic meter ($506/cubic meter or $1.91/gal).

Brazil’s anhydrous ethanol prices for prompt delivery were assessed at $450/cubic meter ($1.70/gal) FOB Santos during the week ended 21 March, according to global chemical market intelligence service ICIS pricing.

Brazil is the world’s second-largest producer of ethanol, after the US, but the leading exporter of the biofuel.

($1 = R2.08)

By: William Lemos
+1 713 525 2653

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