22 May 2007 22:40 [Source: ICIS news]
HOUSTON (ICIS news)--Brazil’s new futures ethanol contract will likely increase liquidity in the local market by making pricing more transparent, a trader said on Tuesday.
The new anhydrous contract is quoted in US dollars, and it debuted on Friday on Brazil’s futures exchange (BM&F) at $396/cubic metre (cbm). The contract ended on Tuesday 5.3% lower at $375/cbm.
The BM&F said it decided to launch a US dollar contract to meet growing demand for Brazilian ethanol among foreign investors.
The contract is for 30 cbm (30,000 litres) and uses the Santos port as a delivery reference.
Add $15/cbm in logistics costs, one source said, and you should have an FOB (free on board) export anhydrous Brazil price.The BM&F said it will keep its Brazilian real (R) futures ethanol contract active, but one market source said the US dollar contract would likely attract more business going forward.
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