Merrill Lynch Monday said it has created two biofuels indexes for
investors, the MLCX Biofuels Index and the MLCX Biofuels Plus Index.

"Until now, investors seeking to profit from rapid expansion in the
ethanol and biodiesel industries typically recurred to traditional
agricultural commodity indexes or futures," the investment bank said in a
statement.

"Such instruments are vulnerable to very negative roll returns, or
negative carry, due to the storage dynamics of the underlying agricultural
commodity markets. Merrill Lynch's new indexes use a rolling mechanism to
spread the buying and selling process over 15 days."

The MLCX Biofuels Index offers exposure to biofuels, while the MLCX
Biofuels Plus Index offers exposure to biofuels and conventional fossil fuels,
the statement said.

The MLCX Biofuels Index, which weights commodities according to
production levels and calorific potential, contains seven biofuels feedstocks:
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 new indices compete with the UBS Diapason Biofuels indices and the
S&P GSCI, spokesman Johnathon Hodgkinson told Platts via email, as well as
agriculture equities, investment funds providing exposure to agriculture and
land funds.

UBS AG and Diapason Commodities Management SA in March 2006 launched the
UBS Diapason Global Biofuel Index (GBFI), which they billed as the "first
commodity-based index for biological fuels." The index includes ethanol
feedstocks corn, sugar, wheat, barley, rice, lumber, as well as biodiesel
feedstocks rapeseed, canola and soybean oil.

The Chicago Board of Trade ethanol futures contract is being considered
for inclusion in the GBFI as a non-feedstock component, but as of May did not
have enough liquidity, according to the latest GBFI steering committee
meeting. The group will meet again in November.

--Beth Evans, beth_evans@platts.com