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Merrill Lynch introduces biofuels indices

Analysis

Merrill Lynch introduced on Monday two biofuels indices designed to offer investors exposure to the fast-growing biofuels market.

The MLCX Biofuels Index weights commodities according to production levels and calorific potential, in order to reflect their economic value. It contains seven commodities commonly used as biofuels feedstock: sugar, corn, soybeans, barley, rapeseed, canola and soybean oil.

The MLCX Biofuels Plus Index adds gasoline and diesel to the commodities in the MLCX Biofuels Index. The MLCX Biofuels Plus Index reflects how current technology and infrastructure is more geared to blending biofuels with conventional fossil fuels than to offering a pure biofuel alternative.

“Our indices have been carefully designed to mitigate the negative roll returns inherent to many agricultural commodities markets,” said Francisco Blanch, Head of Global Commodity Research at Merrill Lynch. “They also offer additional returns by overweighting crops that produce the most energy in biofuel production, notably sugar and soybeans.” (people.com.cn)

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