Ethanol Market Update - 1/22/26

Overview

Market Overview

Chicago ethanol futures eased modestly Wednesday following Tuesday’s sharp rally, with the curve giving back a portion of recent gains. CU Feb settled at $1.58, down 0.5¢ on the day, while losses of 0.75–1.25¢ extended across most of the 2026 strip. Despite the pullback, values remain well above last week’s lows, keeping the broader structure constructive.

The market appears to be digesting Tuesday’s aggressive move higher, with profit-taking and spread normalization driving the session rather than any material shift in fundamentals. Volume remained healthy at ~3,900 contracts, indicating continued commercial engagement rather than a lack of conviction.

Production Update

U.S. ethanol production remains steady into late January, with Liquidity Energy’s internal model showing little deviation from recent levels.

• Estimated Production: ~1.12–1.13 MMbpd

• Utilization: ~76–77%

• Operating Environment: Stable

Plants continue to run consistently, supported by manageable corn costs and steady coproduct demand. No widespread outages or material rate changes have been observed. Near-term production remains well aligned with current demand, reinforcing the view that recent price volatility has been market-driven rather than supply-led.

Futures & Curve Structure

Ethanol CU – 1/21 Settlements

Q1 Avg: ~1.5825
Q2 Avg: ~1.6440
Q1/Q2: ~−6.1¢

The curve remains backward, though front-end spreads softened slightly as nearby contracts consolidated. Q1 continues to trade at a discount to Q2, but the structure remains orderly and well supported.

Market Structure & Flows

• Open interest increased modestly to ~38,800 contracts, suggesting new positioning rather than liquidation.

• The bulk of trading activity remained concentrated in Feb and Mar, consistent with near-term hedging and roll activity.

• Calendar spreads narrowed slightly, reflecting adequate nearby supply and comfortable short-term coverage.

Cash markets remain calm, tracking futures closely with no signs of regional stress or dislocation.

Market Insight

Wednesday’s pullback appears corrective rather than bearish. The market has repriced higher over the past week, and current levels are drawing two-way trade as participants reassess value. Fundamentals remain steady: production is stable, demand is consistent, and inventories appear manageable.

Absent a material change in export flow, corn pricing, or operational disruptions, ethanol futures are likely to remain range-bound, with direction driven by spreads and technical levels rather than outright fundamentals.

Summary

Ethanol futures eased on Wednesday, with CU Feb settling at $1.58, as the market consolidated after Tuesday’s sharp rally. Production remains steady near 1.12–1.13 MMbpd, utilization holds in the mid-70% range, and cash markets remain orderly.

The broader tone stays constructive, though near-term trade is likely to remain technical and spread-driven as the market works through recent gains.

Technicals

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Disclaimer

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.

This article and its contents are provided by Liquidity Energy, LLC ("The Firm") for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any commodity, futures contract, option contract, or other transaction. Although any statements of fact have been obtained from and are based on sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed.

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