Liquidity Of The Biofuels Market by Rick Kment
The ethanol futures contract is relatively young, but the
market has tremendous growth potential. Here’s why.
Since the early 1970s, the ethanol and biofuels
industry has witnessed rapid and unprecedented
growth. In the last couple of years
in particular, the attention surrounding ethanol and biofuels has exploded on a national and global
level. From celebrities and politicians, to activists and
environmentalists, to the local farmers and table-talk
pundits, everyone is weighing in on the topic. The
biofuels industry has evolved from a sleepy, farmtown
dream into a booming 21st-century phenomenon.
Generally speaking, a young but profitable industry
with massive growth potential usually brings out
the eager investor in all of us. However, since the first
ethanol futures contract debuted in 2004, it has
generated relatively little interest and remains today
an illiquid market. As the industry continues to
evolve, many investors wonder if and when this
fledgling market will begin to flourish.
AN APPEALING MARKET
The recent popularity and demand for biofuels has been
propelled by two key factors: a governmental push to reduce the country’s dependency
on foreign oil, and an increase in the
development and implementation
of environmental policies.