CBOT’s Ethanol Futures

WASHINGTON, June 19 /PRNewswire-FirstCall/ — Chicago Board of Trade (CBOT®) Chairman Charles P. Carey testified before the United States Senate Committee on Energy and Natural Resources today regarding the CBOT’s Ethanol futures contract — the only actively traded denatured ethanol futures contract listed in the U.S.

Chairman Carey commended the U.S. Congress for enacting policies that encourage research, production and use of renewable fuels. The Energy Policy Act of 2005 included a national Renewable Fuels Standard (RFS) that created a baseline renewable fuel use requirement of 4 billion gallons in 2006, increasing production to 7.5 billion gallons by 2012.
“The CBOT supported the establishment of the RFS and believes its implementation will continue to foster development of the U.S. renewable fuels industry, ultimately establishing a more self-sustainable energy supply and providing a key source of potential revenues for farmers and rural economies in the U.S.,” said Carey.
In his testimony, Carey highlighted the CBOT’s initial involvement in the ethanol industry and recounted how the Exchange saw the need to establish a price risk management tool for the emerging industry.
“In our research we learned that the ethanol industry lacked reliable price discovery and viable price risk management tools,” said Carey. “Part of the CBOT’s mission is to provide transparent risk management tools of the highest integrity, and to provide a price discovery mechanism and disseminate the prices at which transactions occur on our exchange.”
Since the launch of the CBOT Ethanol futures contract, Carey said the contract has demonstrated steady growth in volume and open interest. Today, market participants have open interest positions in the contract going out one year into the future and representing more than 24 million gallons of ethanol. In order to increase availability of the product, in May the CBOT launched its Ethanol contract electronically during the CBOT’s daytime open auction trading hours.
About the CBOT Ethanol Futures Contract
Launched in 2005, the CBOT Ethanol futures contract (symbol: ZE) was the direct result of a collaborated effort between the CBOT and the ethanol industry, which desired an effective vehicle for both price discovery and a risk management tool to manage price volatility within the domestic U.S. ethanol market. The deliverable grade of the CBOT Ethanol Futures Contract is Denatured Fuel Ethanol as specified in the American Society for Testing and Materials standard D4806 for Denatured Fuel Ethanol for Blending with Gasolines for Use as Automotive Spark-Ignition Engine Fuel plus California standards. One CBOT Ethanol futures contract represents 29,000 gallons or one rail car. Employing the most advanced electronic delivery system within the industry, the contract has had successful consecutive deliveries, demonstrating the efficiency of the physical delivery settlement process. The contract is available to trade on the Exchange’s electronic platform, as well as via open auction, from 9:30 a.m. – 1:15 p.m. (CT). The contract resumes trading electronically from 6:36 p.m. – 6:00 a.m. (CT) daily. For more information on the CBOT Ethanol futures contract, please visit www.cbot.com .
About the CBOT
As one of the leading global derivative exchanges, the Chicago Board of Trade provides a diverse mix of financial, equity and commodity futures and options-on-futures products. Building on its 158-year history, the CBOT continues to advance into the future using the strength of deep liquidity, market integrity and member-trader expertise. Using superior trading technology in both electronic and open-auction trading platforms, the CBOT provides premier customer service to risk managers and investors worldwide. For more information, visit our website at www.cbot.com .
Forward-Looking Statements
In this release, our use of the words “may,” “should,” “could,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or other comparable terminology is intended to identify forward- looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements. More detailed information about factors that may affect our performance may be found in filings made by CBOT Holdings, Inc. with the Securities and Exchange Commission, which can be obtained at its website at www.sec.gov. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

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