What are Ethanol Futures?

Ethanol futures give ethanol producers and marketers a useful tool to protect themselves against the risk of price fluctuations in the ethanol market.

An Ethanol future is a standardized contract that is traded on an exchange between two parties. The buyer of the contract agrees to take delivery of a specified amount of ethanol at an agreed upon contract price, with delivery and payment occurring at a future specified date. The seller agrees to supply such a quantity as per the contract.

Thanks to the drastic price fluctuations and delivery challenges of the physical ethanol market, ethanol futures have become tremendously important in recent times.

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