Our early ancestors first used ethanol, which is basically fermented sugar, as a very intoxicating alcoholic beverage. Today, if we were to compile a list of modern uses of ethanol, we would quickly see that this substance has come a very long way in the past few millennia. Government and private sector research funds have been pumped into ethanol development as a biofuel, but its long-standing popularity as a feedstock, solvent, and liquor has kept traders and speculators interested in the energies markets for decades.
|Ethanol Contract Specifications|
|Contract Size||29,000 gallons (approximately one railcar)|
|Grade And Quality||Denatured Fuel Ethanol ASTM D4806 + California Standards|
|Trading Hours||CME Globex: Sunday – Friday 6:00 p.m. – 5:15 pm ET with a 45-minute break each day beginning at 5:15 pm ET. Trade is Flow per day or Flow per month|
|CME ClearPort: Sunday – Friday 6:00 p.m. – 5:15 pm ET with a 45-minute break each day beginning at 5:15 pm ET. Trade is Flow per day or Flow per month|
|Minimum Price Fluctuation||$0.001 per gallon ($1.827 to $1.828 = $29.00 per contract)|
|Product Code||CME Globex: EH|
|CME ClearPort: EH|
|Listed Contracts||36 consecutive months|
|Last Trade Date||The third business day of the delivery month|
|Settlement Procedures||Physical Delivery – Ethanol Futures Settlement Procedures|
|Price Limit Or Circuit||$0.30 per gallon ($8,700 per contract) above or below the previous day’s settlement price. No limit in the spot month (limits are lifted beginning on first position day).|
|Last Delivery Date||The second business day following the LTD of the delivery month|
|Exchange Rules||These contracts are listed with, and subject to, the rules and regulations of CBOT|
|Source: CME Group|
Ethanol is considered to be a bioenergy, meaning that it is a biofuel derived from a biomass. Much interest has been gained in ethanol and other bioenergy sources because of the soaring costs of oil within the past decade. When blended with gasoline, ethanol can be used as an effective fuel source. The rising production and use of ethanol can be positively correlated with corn production as well, possibly having an impact on the agricultural market. For instance, while ethanol only contributes to around 10% of the overall U.S. gasoline market, the corn used to produce it can represent up to 40% of the corn crop used.
Ethanol futures can allow traders to address price risk of the commodity as well as the opportunity for arbitration with the price of corn futures. Ethanol and other gasoline products allow traders to participate in a liquid market as well.
Last updated September 2015
Recent Posts on Ethanol
- Ethanol prices plummet due to weak domestic demand (10/3/2014) - Ethanol prices have plummeted due to weak domestic demand and a glut in supply.
- Craig Turner Featured in Voice of America Video and Article about Ethanol, the EPA’s Mandate, and Corn Prices (12/12/2013) - Daniels Trading Senior Broker & Grain Analyst Contribution Editor Craig Turner was featured in the Voice of America video and article titled “Midwest Farmers Concerned with EPA Changes to Ethanol Standards.” The video and article focus on how reduced ethanol demand may lower prices for corn in the Midwest.
- Craig Turner Discusses EPA Ethanol Mandate Reductions with Dow Jones Newswire (11/18/2013) - Daniels Trading Senior Broker Craig Turner was quoted in the Dow Jones Newswire article titled “Ethanol mandate jitters slam corn futures.” This news story reports on how potential EPA reductions to the Ethanol Mandate are impacting corn prices. Corn futures fell to a 38-month low after the U.S. Environmental Protection Agency on Friday suggested cutting… Read more.