A group of Spanish investors is building a new bioethanol plant in the western region of Extremadura that should be producing fuel from maize in 2009. Alcoholes Biocarburantes de Extremadura (Albiex) has already started work on the site near Badajoz and expects to spend €42/$59 million on the plant in the next two years. It will produce 110 million litres a year of bioethanol and 87 million kg of grain byproduct that can be used for animal feed.
Merrill Lynch starts biofuels indexes
Merrill Lynch & Co., the third-biggest U.S. securities firm, has started two indexes tracking raw materials used in the production of biofuels, as record oil prices spur demand for alternative fuels. The MLCX Biofuels Index tracks seven commodities including sugar, corn and rapeseed, and holdings are based on production and calorific potential. The MLCX Biofuels Plus Index includes the seven commodities as well as gasoline and diesel. The company made the announcement to Bloomberg LP, in which it is a passive minority investor.
Governments are encouraging alternative fuels to limit carbon-dioxide emissions from fossil fuels and reduce dependency on oil imports. Crude oil rose to a record $83.90 a barrel on September 20 in New York. The European Union wants biofuels to account for an average of 10 percent of transport fuel by 2020, from 1 percent in 2005.
Merrill's indexes are based on a strategy that buys and sells contracts over 15 days to help reduce losses caused by the so-called contango in the market, the company said. A market is in contango when prices of commodities close to delivery are cheaper than those delivered at later dates. In such a situation, investors holding futures positions have to pay more when renewing monthly contracts, reducing returns. Funds that track commodity indexes allow investors to replicate the gains and declines in the prices of a selection of raw materials without owning them.
The company says that investors seeking to profit from rapid expansion in the ethanol and biodiesel industries typically had to recur to traditional agricultural commodity indices or futures:
energy :: sustainability :: ethanol :: biodiesel :: biomass :: bioenergy :: biofuels :: investment :: commodities ::
They also offer additional returns by overweighting crops that produce the most energy in biofuel production, notably sugar and soybeans.
The MLCX Biofuels Index weights commodities according to production levels and calorific potential, in order to reflect their economic value.
The MLCX Biofuels Plus Index adds gasoline and diesel to the commodities in the MLCX Biofuels Index. The MLCX Biofuels Plus Index reflects how current technology and infrastructure is more geared to blending biofuels with conventional fossil fuels than to offering a pure biofuel alternative.
References:
Engineering News: Merrill Lynch launches biofuels indices - October 1, 2007.
Bloomberg: Merrill Starts Biofuels Indexes on Alternative Energy Demand - October 1, 2007.
Governments are encouraging alternative fuels to limit carbon-dioxide emissions from fossil fuels and reduce dependency on oil imports. Crude oil rose to a record $83.90 a barrel on September 20 in New York. The European Union wants biofuels to account for an average of 10 percent of transport fuel by 2020, from 1 percent in 2005.
Merrill's indexes are based on a strategy that buys and sells contracts over 15 days to help reduce losses caused by the so-called contango in the market, the company said. A market is in contango when prices of commodities close to delivery are cheaper than those delivered at later dates. In such a situation, investors holding futures positions have to pay more when renewing monthly contracts, reducing returns. Funds that track commodity indexes allow investors to replicate the gains and declines in the prices of a selection of raw materials without owning them.
The company says that investors seeking to profit from rapid expansion in the ethanol and biodiesel industries typically had to recur to traditional agricultural commodity indices or futures:
Such instruments are vulnerable to very negative roll returns, or negative carry, due to the storage dynamics of the underlying agricultural commodity markets. - Francisco Blanch, Head of global commodity research, Merrill LynchThe firm’s new indices have been designed to mitigate the negative roll returns inherent to many agricultural commodities markets:
energy :: sustainability :: ethanol :: biodiesel :: biomass :: bioenergy :: biofuels :: investment :: commodities :: They also offer additional returns by overweighting crops that produce the most energy in biofuel production, notably sugar and soybeans.
The MLCX Biofuels Index weights commodities according to production levels and calorific potential, in order to reflect their economic value.
The MLCX Biofuels Plus Index adds gasoline and diesel to the commodities in the MLCX Biofuels Index. The MLCX Biofuels Plus Index reflects how current technology and infrastructure is more geared to blending biofuels with conventional fossil fuels than to offering a pure biofuel alternative.
References:
Engineering News: Merrill Lynch launches biofuels indices - October 1, 2007.
Bloomberg: Merrill Starts Biofuels Indexes on Alternative Energy Demand - October 1, 2007.
0 Comments:
Post a Comment
Links to this post:
Create a Link
<< Home