Ethanol Market Update - 1/8/26

Overview

Below is a full ethanol market report for Thursday, January 8, 2026, reflecting settlements from January 7.

Ethanol Market Update – January 8, 2026

Liquidity Energy, LLC

Market Overview

Chicago ethanol futures extended losses on Wednesday, with values sliding across the curve amid heavier volume and broad-based liquidation. The selloff was orderly but persistent, signaling continued pressure from soft demand expectations and a well-supplied near-term balance. Front-end contracts led the move lower, while deferred months followed in sympathy.

The curve remains backward but continues to flatten, with Q1 losing ground relative to Q2 as nearby spreads weaken. Despite increased participation, there were no signs of panic selling—rather, the market appears to be recalibrating fair value following last week’s failed attempt to stabilize.

Production Update

U.S. ethanol production remains steady but uninspiring. Liquidity Energy’s internal tracking model shows output holding near recent averages, with no material disruptions reported. Margins remain manageable, though the recent price softness may begin to test producer discipline if sustained.

• Estimated Production: ~1.12–1.13 MMbpd

• Utilization: ~76%

• Operating Environment: Stable, with seasonal demand remaining muted

Plants continue to run consistently, though forward selling interest appears limited at current price levels.

Futures & Curve Structure

Ethanol CU – Jan 7 Settlements

• Curve Tone: Soft and flattening

• Front-end pressure: Persistent, with Jan–Mar absorbing the bulk of selling

• Liquidity: Elevated, particularly in Feb and Mar

The steady decline across deferred months suggests macro positioning rather than a localized demand shock.

Volume & Open Interest

• Estimated Volume: 1,056 contracts (Feb), 313 (Mar), 370 (Apr)

• Open Interest: Largely stable, indicating position rotation rather than mass liquidation

Participation increased notably in the core Q1 contracts, reinforcing the idea of active rebalancing by commercial and speculative accounts.

Market Insight

Ethanol continues to struggle to find support as winter blending demand remains lackluster and export flows fail to provide a catalyst. The curve’s inability to steepen, even amid steady production, underscores the market’s comfort with current supply levels.

Absent a demand-driven surprise or a production-side disruption, the path of least resistance remains sideways-to-lower. Traders remain focused on spreads and relative value, with outright length showing limited conviction.

Summary

Ethanol futures weakened further on Wednesday, with Jan settling at $1.58 and losses extending across the forward curve. Production remains steady, liquidity has improved, and the market continues to grind lower in a controlled, technical move.

Near-term direction will hinge on whether demand signals improve or if producers begin responding more aggressively to margin pressure. Until then, ethanol remains firmly rangebound with a bearish tilt.

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.

Commodity trading involves risks, and you should fully understand those risks prior to trading. Liquidity Energy LLC and its affiliates assume no liability for the use of any information contained herein. Neither the information nor any opinion expressed shall be construed as an offer to buy or sell any futures or options on futures contracts. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. Any opinions expressed herein are subject to change without notice, are that of the individual, and not necessarily the opinion of Liquidity Energy LLC