February 17, 2010

CME Group creates futures contract for DDGS

CME Group (CME) on Tuesday (Feb 16) announced the creation of a futures contract for DDGS, a co-product of ethanol production used as animal feed.
 

The exchange said the contract, which will begin trading April 26, can be used by livestock and ethanol producers, along with "commercial corn interests" to lock in the price of feed or hedge ethanol refining margins.

"Using the DDGS futures, along with our corn, natural gas and ethanol contracts, also allows real margin management for participants in the fast-growing ethanol sector, once again highlighting the synergies of the CME Group product suite," Tim Andriesen, CME group managing director for commodities, said in a statement.

Each contract will be equivalent to 100 short tonnes of DDGS.

Announcement of the contract comes as DDGS usage is climbing. The Renewable Fuels Association said Monday (Feb 15) that the ethanol industry exported 5.64 million tonnes of DDGS, worth almost US$1 billion, in 2009. The 2009 exports were up 24% from 2008 levels.