Ethanol Market Update - 1/6/26

Overview

Market Overview

Ethanol futures rebounded on Monday after the holiday-softened trade, with the curve firming across all active months. The move was orderly and broadly supported, led by the front end and extending through the balance of 2026. While absolute volumes remained moderate, the structure suggests renewed participation as the market settles back into a normal post–year-end rhythm.

The front-month recovery reflects a combination of steady physical demand, improved sentiment after last week’s pullback, and positioning normalization following the turn of the calendar. There were no signs of stress in the curve, and spreads remain well behaved despite lingering seasonal headwinds.

Futures Performance – CU Ethanol (1/5 Settles)

Estimated Volume: 1,103
Prior Day Open Interest: 37,064

The strongest activity remained concentrated in Jan–Mar, with participation thinning further out the curve but pricing still adjusting higher in sympathy.

Curve Structure

• Q1 2026 Average: ~1.615

• Q2 2026 Average: ~1.683

• 1H 2026 Average: ~1.650

• Q1/Q2: ~−6.8¢

The curve remains modestly backward, though the slope continues to flatten. Front-end spreads tightened slightly as January regained footing, while deferred months tracked higher without introducing structural tension.

Production Update

U.S. ethanol production remains steady as the market moves deeper into January. Liquidity Energy’s internal model shows output holding near recent norms, with no broad-based operational disruptions reported.

• Estimated Production: ~1.13 MMbpd

• Utilization: ~76–77%

• Operating Environment: Stable

Seasonal blending demand remains subdued, but steady export flows and manageable corn input costs continue to support consistent run rates.

Market Insight

Monday’s strength appears driven more by positioning and normalization than by any singular fundamental catalyst. The holiday-related softness observed late last week was quickly absorbed, suggesting underlying balance in the system.

End users appear comfortable with nearby coverage, while producers remain disciplined on forward selling. Absent a material shift in exports or an unexpected supply disruption, near-term price action is likely to remain range-bound, with spreads and relative value continuing to drive trade decisions.

Summary

Ethanol futures started the week on firmer footing, with CU Jan settling at $1.60, up 1.75¢ on the day. Strength was broad-based across the curve, volumes improved modestly, and structure remains orderly.

Production continues to run steady, cash markets remain aligned with futures, and the curve reflects a well-balanced near-term environment. As January progresses, attention will stay focused on export pace, blending economics, and any shifts in producer run rates.

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.

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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