Ethanol Market Update - 12/31/25

Market Overview

Ethanol futures firmed modestly Tuesday, closing higher across the forward curve following Monday’s broad-based selloff. CU Jan ’26 settled at $1.590, up 1.0¢ on the day, with gains extending through the balance of 2026. While activity remained thin due to year-end positioning, the market showed signs of stabilization as buyers stepped back in at the lower end of the recent range.

Volume improved slightly, with 1,896 contracts traded, while total open interest edged higher to 37,299, suggesting light re-engagement rather than forced liquidation. The curve remains modestly backward, but front-end pressure has eased heading into the final session of the year.

Production Update

U.S. ethanol production remains steady into year-end, with the model continuing to show stable output levels. Operating rates remain consistent across most regions, supported by manageable input costs and steady coproduct values.

• Estimated Production: ~1.13 MMbpd

• Utilization: ~76–77%

• Operating Environment: Stable, with no widespread outages reported

Holiday scheduling continues to cap incremental production changes, keeping supply balanced despite seasonally softer demand.

Futures & Curve Structure

Ethanol CU – 12/30 Settlements

• Q1 ’26 Avg: ~1.611

• Q2 ’26 Avg: ~1.687

• 1H ’26 Avg: ~1.649

The curve remains backward but less compressed, with front spreads recovering slightly after recent weakness. Gains were uniform, suggesting technical support rather than a demand-driven rally.

Market Insight

Tuesday’s move higher appears largely corrective, following aggressive selling earlier in the week. With much of the speculative and discretionary selling already done, prices found support near recent lows. End users remain patient, while producers appear comfortable holding inventory into early January.

Calendar spreads remain the key signal: while still backward, the structure implies sufficient nearby supply and limited urgency from blenders. Without a catalyst from exports or production disruptions, near-term trade is expected to remain rangebound and technically driven.

Summary

Ethanol futures closed Tuesday firmer, recovering modestly from prior losses as CU Jan ’26 settled at $1.590. Volume and open interest both ticked higher, indicating stabilization rather than capitulation. Production remains steady, cash markets are orderly, and the forward curve continues to reflect a well-balanced supply environment.

As the market heads into the final trading day of 2025, attention will turn to early-January positioning, post-holiday demand signals, and any shifts in export activity that could influence Q1 pricing.

Technicals

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