Ethanol Market Update - 1/15/26

Market Overview

Ethanol futures extended their recent slide on Wednesday, with losses concentrated across the front half of the curve. Selling pressure remained orderly but persistent, as the market continues to recalibrate following last week’s sharp break lower. Nearby demand remains adequate, though not strong enough to absorb length as calendar spreads soften and Q1 values drift lower.

The curve remains modestly backward but continues to flatten, reflecting comfortable nearby supply and limited urgency from blenders or exporters. Trade volume picked up modestly in the front months, suggesting active repositioning rather than forced liquidation.

Overall tone remains defensive, with participants focused on margin preservation and near-term demand signals rather than upside exposure.

Production Update

U.S. ethanol production remains steady despite the weaker price environment. Liquidity Energy’s internal production model shows output holding near recent averages, with no meaningful changes in plant utilization reported.

• Estimated Production: ~1.12–1.13 MMbpd

• Utilization: ~76–77%

• Operating Environment: Stable; no widespread outages or logistics disruptions

Margins have compressed but remain manageable for most producers, supported by relatively stable corn inputs and steady coproduct values. With winter demand seasonally subdued, production is expected to remain flat to slightly lower near term, consistent with historical January patterns.

Futures & Curve Structure

Chicago Ethanol (Platts) – January 14 Settlements

• Q1 Average: ~1.5425

• Q2 Average: ~1.6150

• Q1/Q2 Spread: ~−7.25¢

The curve continues to signal ample near-term supply, with Q1 values underperforming Q2 and the front spreads gradually compressing.

Volume & Open Interest

• Estimated Volume: ~6,600 contracts

• Prior Day Open Interest: ~34,400 contracts

Open interest declined modestly across the front months, reinforcing the view that recent weakness has been driven more by position unwinds and rebalancing than by fresh bearish conviction.

Market Insight

The ethanol market remains under pressure as participants digest weaker flat prices and narrowing spreads. While production fundamentals remain stable, the absence of a clear demand catalyst has left futures vulnerable to continued drift lower.

Export flows remain steady but unspectacular, and domestic blending demand continues to follow typical winter seasonality. Without a material change in production rates, feedstock pricing, or export economics, near-term price action is likely to remain technical and spread-driven.

Producers appear disciplined on forward sales, while end users remain patient, opting to wait for clearer signs of a base before extending coverage.

Summary

Ethanol futures finished Wednesday lower across most of the curve, with Jan 26 settling at $1.535 and Q1 values continuing to soften relative to Q2. Production remains steady near 1.12–1.13 MMbpd, and overall market structure points to a well-supplied, orderly environment.

Until demand improves or production meaningfully adjusts, ethanol prices are likely to remain rangebound with a slight downward bias, driven primarily by technical trade and calendar spread movement.

Technicals

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The Coolidge Report is published by Coolidge Shop LLC and is intended for informational purposes only. This report does not constitute trading recommendations, financial advice, or an offer to buy or sell any commodity. While efforts are made to ensure accuracy, Coolidge Shop LLC makes no warranties regarding completeness or reliability. Coolidge Shop LLC is not registered as a Commodity Trading Advisor (CTA) with the CFTC, and this report should not be interpreted as a solicitation to engage in futures or derivatives trading.

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