BM&F Bovespa, the Brazilian securities, commodities and futures exchange, has said it will launch cash-settled hydrous ethanol futures and options on May 17.
It says it hopes to reduce price risk for participants in
Brazil’s ethanol market, one of Latin
America’s most active sectors.
Prices will be formed using the Ethanol Hydrated Price
Indicator, calculated by the Research Centre for Applied
Economics (CEPEA) of the Luiz de Queiroz School of Agriculture
(ESALQ) at the University of São Paulo, based in
Paulínia, the country’s largest fuel
The bourse hopes ethanol mills and distributors of the fuel
will trade the contracts and that cash settlement will
enable broader market participation. It will allow arbitrage
between the physical and futures markets and leave the market
open to individual investors, banks and foreign investors.
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