Ethanol Market Update - 1/23/26

Overview

Market Overview

Chicago ethanol futures extended their rebound Thursday, with strength led by the front of the curve and solid participation across Q1 and Q2. The rally follows several sessions of heavy liquidation earlier in the month and appears driven by value-based buying rather than any sudden shift in fundamentals.

Nearby demand remains steady, while the forward curve continues to reflect a well-supplied but stabilizing market. The tone has improved materially compared to mid-January, though prices remain well below early-month highs.

Total participation was healthy, with strong volume concentrated in February and March contracts.

Futures Performance (CU – 1/22 Settles)

Curve averages

• Q1 Avg: ~1.596

• Q2 Avg: ~1.661

• 1H Avg: ~1.629

The curve remains modestly backward, but the spread compression seen earlier this month has slowed as front-month prices recover.

Volume & Open Interest

• Estimated volume: ~7,000+ contracts

• Open interest: Continued to build in February and March, suggesting new length rather than short covering alone.

The concentration of volume in Q1 indicates renewed engagement from both commercial and speculative participants after the recent selloff.

Production Overview

U.S. ethanol production remains stable, with no material changes in run rates observed this week.

• Estimated production: ~1.13 MMbpd

• Utilization: ~76–77%

• Operating conditions: Steady

• Feedstock economics: Corn values remain manageable, supporting continued runs

With margins compressed but still positive for efficient plants, producers appear comfortable maintaining output levels. No widespread outages or disruptions have been reported.

Market Insight

The market is showing early signs of balance after January’s sharp downside move. While fundamentals have not materially tightened, prices had likely overshot to the downside earlier in the month, opening the door for a technical and value-driven recovery.

Near-term upside will depend on:

• Sustained participation in Q1 contracts

• Export program consistency

• Any post-winter shift in blending economics

Absent a demand shock, the market appears to be transitioning from liquidation to consolidation.

Summary

Ethanol futures strengthened across the curve Thursday, led by February and March contracts, as the market continued to stabilize after recent losses. Production remains steady, the curve structure is orderly, and participation has improved meaningfully.

The near-term outlook is neutral-to-firm, with trade likely to remain rangebound unless fundamentals materially shift.

Technicals

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