« Where Ethanol Meets Opportunity | Home | Biodiesel Improves Diesel Lubrication »
Brazil Securities Body Approves Ethanol Futures Contract
By Mr Ethanol | April 24, 2007
Dow Jones:
Brazil’s Securities and Exchange Commission, known as CVM, late Monday approved the creation of a new ethanol futures contract to operate on the Brazilian Commodities & Futures Exchange, or BM&F.
BM&F’s director of agriculture derivatives Felix Schouchana will announce the launching of the contract at an event in Sao Paulo on Tuesday.
BM&F economist, Fabiana Perobelli, told Dow Jones Newswires that the contract would likely start trading within the first week of May. “There’s no fixed date at this time, but it should be trading by May 7,” she said.
A BM&F press agent said BM&F officials are scheduled to present the new ethanol futures contract at the annual Sugar Dinner on May 4 in New York, an event attended by international sugar and ethanol traders.
Local and world interest in Brazil’s sugarcane-based ethanol has surged in the past year and a half, due to towering oil prices, growing climate change concerns, and the country’s rapidly increasing domestic flex-fuel car fleet among other factors.
To encourage more export-oriented traders to use its ethanol contract, the BM&F is proposing the implementation of four principal changes from its current anhydrous ethanol contract.
First, the new ethanol contract will have prices quoted in dollars, though buyers will pay the amount in Brazilian reals. “The price will be pegged to the exchange rate of the day,” said Schouchana.
Second, the price will be negotiated at Brazil’s principal commodity port of Santos, to facilitate export of the product. Currently, prices are formed at the city of Paulinia in the interior of Sao Paulo, where many of the nation’s fuel distributors are congregated.
Third, sellers will now be responsible for the delivery of ethanol to the port of Santos, an hour outside of the city of Sao Paulo, rather than to Paulinia. To aid this change, the delivery time for the ethanol has been extended to 22 working days, up from the current deadline of eight working days.
Fourth, if the ethanol is bought for the export market, there will be no taxes covered on the ethanol, said Schouchana.
If, however, the ethanol contract is bought to supply the domestic market, there will still be a 3.65% PIS/Cofins federal social security tax imposed on the value of the contract, just as there is for the current BM&F ethanol contract, he added.
Brazil is the world’s leading sugarcane ethanol producer.
Topics: BizOp, Brazil, News, Stock Market |
Related Posts
- German Minister Approves Brazil Ethanol
- Outside The Box: Investing In Brazil
- Brazil’s Sugar/Ethanol Makers May Begin To Reduce New Mill Investing
- Credit Crunch Panic Pounds Commodities
- China’s Gofar To Build Cassava Fuel Ethanol Plant
- The Changing Ethanol Market: Implications For Stakeholders
- Brazil Sugar, Ethanol Market Agonized Over Dollar, NY Prices
- Rush To Build Ethanol Plants Loses Its Steam
- Toyota To Debut Ethanol Cars In Brazil
- Biofuel Funds Are Taking Off
New Way Of Making Easy Money Online