Ethanol Futures Contracts

Side-by-side comparison of contract specificatons

BM&F:  On March 31, 2000 the BM&F in Brazil launched the first ethanol contract. It currently trades about 200 contracts per day.

NYBOT:  On May 7, 2004 the NYBOT launched an Ethanol futures contract.  No trading has been recorded since November 19, 2004.

CME:  On March 3, 2005 the CME announced the launch an Ethanol futures contract on March 29, 2005.

CBOT:  On March 15, 2005 the CBOT announced the launch of an Ethanol futures contract on March 23, 2005.

The table below provides a comparison of the salient features of the alcohol/ethanol contracts.  The NYBOT and BM&F contracts are alcohol (undenatured ethanol) contracts.

CBOT is using 29,000 gallons and the CME contract size is 30,000 gallons.

The CBOT uses a shipping certificate as the delivery instrument. When the seller delivers a shipping certificate the buyer has the right to request load-out, hold onto the certificate, sell the certificate, or sell a futures contract and redeliver the certificate. Holding the shipping certificate accrues a premium charge not in excess of $0.0007 per gallon per day.  The last trading day of the CBOT Ethanol contract is within the delivery month which makes redeliveries possible.  The CME Ethanol contract on the other hands stops trading before the delivery month.  All open positions after the last trading day are delivered during the delivery month and the corresponding load-out must be made.

Salient Feature	CBOT contract specifications	CME contract specifications
Product:	ASTM D4806 for “Denatured Fuel Ethanol for Blending with Gasolines for Use as Automotive Spark-Ignition Engine Fuel” plus California standards.	ASTM D4806, including Appendix X2 for California Ethanol Requirements Measured at 60ºF using Table 6B of ASTM D1250
Pricing Basis:	In-tank at the buyer’s Chicago, IL Terminal	FOB Chicago, Illinois
Ticker Symbols:	AC for Open Auction ZE for Electronic
Trading Hours:	Open Auction: 9:30 a.m. - 1:15 p.m. Monday – Friday CBOT Electronic Platform: 7:36 p.m. – 6:00 a.m. Note: Expiring contract closes at 12:00 noon on Last Trading Day	CME Globex® only:  Monday-Friday, 9:05 AM to 1:30 PM Chicago time
Contract Months:	Twelve consecutive calendar months; will launch with seven consecutive months starting with the June 2005 contract.	All 12 calendar months with 12 consecutive contracts listed for trading at all times; 3 consecutive contracts listed until after first two expirations
Contract Unit:	29,000 U.S. gallons (approximately one rail car)	30,000 U.S. gallons; ±5% variation in delivery unit without penalty, with payment based on exact quantity delivered
Minimum Fluctuation:	One tenth of one cent ($0.001) per gallon ($29.00 per contract)	One tenth of one cent ($0.001) per gallon ($30.00 per contract)
Maximum Fluctuation:	Fifteen cents ($0.15) per gallon ($4,350 per contract) Price limits removed on first position day (business day prior to first notice day).	No price limit in the front month during the last 5 days of trading; $.10 per gallon ($3,000 per contract) above or below the previous day’s settlement price; $.20 per gallon ($6,000 per contract) after three consecutive limit-up or three consecutive limit-down settlements in the contract month nearest to expiration that is subject to a price limit
Position Limit:	200 contracts net in spot month; 1,000 contracts net in any month; 1,000 contracts net in all months combined.	1,000 contracts any month except front month 500 contracts during last 15 trading days of front month; 250 contracts during last 10 trading days; 100 contracts during last 5 trading days
Last Trading Day:	The business day prior to the 15th calendar day of the delivery month	Last business day of the calendar month prior to the contract month
First Notice Day:	One business day prior to the first calendar day of the delivery month	First business day of the contract month
Last Notice Day:	First business day after the last trading day.	Last business day of the contract month
Delivery Period:	The first delivery day is the first business day of the delivery month; the last delivery day is the second business day following the last trading day of the delivery month.	Seller delivers on any business day in the contract month.
Delivery Instrument:	Shipping Certificate; premium charges accrue from day after registration through day after seller receives shipping instructions from the buyer and shall not exceed $0.0007 per gallon per day.	none; delivered contracts must be shipped.
Freight Terms:	Seller and buyer negotiate freight. Chicago, Illinois destination is used by seller if unable to agree on freight charges.	Seller prepays the actual freight charges and bills the buyer the lowest published freight rate for tank cars from Chicago, Illinois to the buyer's destination.
Loading Terms:	Buyer cancels Shipping Certificate and provides Seller with shipping instructions. Seller begins shipment within seven calendar days.	Buyer has two days to designate destination after receiving delivery notice. Seller has seven business days to begin shipping.
Delivery:	Physical delivery by tank car, on track, at shipping origin with seller responsible for transporting product to buyer's destination. Freight charges are privately negotiated between buyer and seller. Should private negotiations fail, the seller shall deliver in-tank at the buyer's Chicago, IL terminal.	Physical delivery; on track via loaded tank car at shipping origin Freight Basing Point: Chicago, IL