Recently developed ethanol futures contracts now allow direct-hedging by ethanol producers. This study examines the effectiveness of one-through eight-week hedges between 2005 and 2008. Our findings show (a) ethanol inventory hedging effectiveness is significant for two-week and longer hedges,...

In response to the development of the U.S. ethanol industry, the Chicago Board of Trade (CBOT)launched the ethanol futures contract in March 2005. This contract is promoted by the CBOT asallowing ethanol producers to hedge corn crushing using strategies similar to those used insoybean crushing....