Merrill launches biofuel indices

Merrill Lynch & Co. Inc. has launched two indexes tracking raw materials used in the production of biofuels.
The indices are designed to mitigate the negative returns that are associated with many commodities markets, The New York-based financial services company said in a statement.
The MLCX Biofuels Index — containing seven commodities commonly used as biofuels feedstock: sugar, corn, soybeans, barley, rapeseed, canola and soybean oil — weighs commodities according to production levels and calorific potential.
The MLCX Biofuels Plus Index includes those seven commodities plus gasoline and diesel fuels.
Both indices use a rolling mechanism to spread the buying and selling process over 15 days to help reduce losses.
Merrill said that it expects demand for agricultural commodities to grow in the long term, due to legislation in the U.S. and Europe.
European Union directives adopted in 2003 aim to derive 5.75% of total transport fuel consumption from biofuels by 2010 and up to 20% by 2020, according to Merrill.
The U.S. Renewable Fuel Standard Program requires that at least 7.5 billion gallons of renewable fuel be blended into vehicle fuel by 2012.
Merrill Lynch has total client assets of approximately $1.7 trillion.