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Home / Education / Markets / Energy Futures Overview / Ethanol Futures

Ethanol Futures

Ethanol Futures 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
Clearing: EH
Listed Contracts 36 consecutive months
Settlement Method Deliverable
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 Facts

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.

Source: USDA

Last updated September 2015

Additional Info

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.

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Risk Disclosure

THIS MATERIAL IS CONVEYED AS A SOLICITATION FOR ENTERING INTO A DERIVATIVES TRANSACTION.

THIS MATERIAL HAS BEEN PREPARED BY A DANIELS TRADING BROKER WHO PROVIDES RESEARCH MARKET COMMENTARY AND TRADE RECOMMENDATIONS AS PART OF HIS OR HER SOLICITATION FOR ACCOUNTS AND SOLICITATION FOR TRADES; HOWEVER, DANIELS TRADING DOES NOT MAINTAIN A RESEARCH DEPARTMENT AS DEFINED IN CFTC RULE 1.71. DANIELS TRADING, ITS PRINCIPALS, BROKERS AND EMPLOYEES MAY TRADE IN DERIVATIVES FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS. DUE TO VARIOUS FACTORS (SUCH AS RISK TOLERANCE, MARGIN REQUIREMENTS, TRADING OBJECTIVES, SHORT TERM VS. LONG TERM STRATEGIES, TECHNICAL VS. FUNDAMENTAL MARKET ANALYSIS, AND OTHER FACTORS) SUCH TRADING MAY RESULT IN THE INITIATION OR LIQUIDATION OF POSITIONS THAT ARE DIFFERENT FROM OR CONTRARY TO THE OPINIONS AND RECOMMENDATIONS CONTAINED THEREIN.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THE RISK OF LOSS IN TRADING FUTURES CONTRACTS OR COMMODITY OPTIONS CAN BE SUBSTANTIAL, AND THEREFORE INVESTORS SHOULD UNDERSTAND THE RISKS INVOLVED IN TAKING LEVERAGED POSITIONS AND MUST ASSUME RESPONSIBILITY FOR THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND FOR THEIR RESULTS.

TRADE RECOMMENDATIONS AND PROFIT/LOSS CALCULATIONS MAY NOT INCLUDE COMMISSIONS AND FEES. PLEASE CONSULT YOUR BROKER FOR DETAILS BASED ON YOUR TRADING ARRANGEMENT AND COMMISSION SETUP.

YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU SHOULD READ THE "RISK DISCLOSURE" WEBPAGE ACCESSED AT WWW.DANIELSTRADING.COM AT THE BOTTOM OF THE HOMEPAGE. DANIELS TRADING IS NOT AFFILIATED WITH NOR DOES IT ENDORSE ANY TRADING SYSTEM, NEWSLETTER OR OTHER SIMILAR SERVICE. DANIELS TRADING DOES NOT GUARANTEE OR VERIFY ANY PERFORMANCE CLAIMS MADE BY SUCH SYSTEMS OR SERVICE.

GLOBAL ASSET ADVISORS, LLC (“GAA”) (DBA: DANIELS TRADING, TOP THIRD AG MARKETING AND FUTURES ONLINE) IS AN INTRODUCING BROKER TO GAIN CAPITAL GROUP, LLC (GCG) A FUTURES COMMISSION MERCHANT AND RETAIL FOREIGN EXCHANGE DEALER. GAA AND GCG ARE WHOLLY OWNED SUBSIDIARIES OF STONEX GROUP INC. (NASDAQ:SNEX) THE ULTIMATE PARENT COMPANY.

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