On May 7, the New York Board of Trade began trading the world's first ethanol futures contracts, and on May 10, the exchange started trading options on those futures.
"Our excitement today is shared by many all across the globe as we have received an incredible amount of interest and support for this contract from every possible constituency," NYBOT Chairman Frederick W. Schoenhut said at a news conference on the day of the launch.
Most of the players in the new futures and options are expected to be ethanol producers, processors and merchandisers, energy trading companies, oil refiners and other companies in the energy business, but Michael McDougall, senior vice president at brokerage firm Fimat USA, New York, said he has seen at least one investment fund indicating some potential interest. He declined to identify the fund.
Mr. McDougall said institutional investors that are inclined to take a look at ethanol futures and options are likely to wait until open interest, or liquidity, builds in the contracts before using them.
"Until open interest increases, it's going to be difficult for funds to justify getting into the contracts," Mr. McDougall said.
But given the recent spike in oil and gasoline prices and increasing calls to reduce America's dependence on crude oil, the NYBOT may have picked an auspicious time to launch them. The Chicago Board of Trade is planning to launch its own ethanol contracts later this year.