Ethanol Market Update - 2/2/26

Overview

Market Overview

Ethanol futures softened into the end of January, with values easing modestly across the curve following last week’s sharp rally. CU February settled at $1.590, down 1.25¢ on the session, while the forward curve saw incremental pressure as risk was pared ahead of month-end positioning.

Despite the pullback, the overall structure remains constructive. Prices are holding well above early-January lows, and spreads continue to signal balanced supply rather than oversupply. The move lower appears corrective rather than trend-changing, driven by profit-taking and calendar positioning rather than a deterioration in fundamentals.

Total estimated volume reached 7,285 contracts, with open interest climbing to 43,215, highlighting continued participation and engagement across the curve.

Production Update

U.S. ethanol production remains steady as January draws to a close. Liquidity Energy’s internal production model indicates output holding near recent averages, with no material disruptions reported across major operating regions.

• Estimated Production: ~1.13 MMbpd

• Utilization: ~76–77%

• Operating Conditions: Stable

• Feedstock & Coproducts: Corn costs manageable; DDG and CO₂ values remain supportive

Plants continue to operate in a disciplined fashion, with run rates aligned closely to demand. With winter blending patterns largely priced in, production remains responsive but not aggressive.

Futures & Curve Structure

Chicago Ethanol (Platts) – 1/30 Settles

• Q1 Average: ~$1.592

• Q2 Average: ~$1.654

• 1H Average: ~$1.623

The curve remains modestly backward, with front-month values still supported relative to deferreds. Backwardation has narrowed slightly but continues to reflect adequate nearby demand and disciplined production.

Market Insight

The ethanol market enters February in a consolidative phase. Last week’s rally was meaningful, and the recent pullback appears orderly and technical in nature. Spreads remain firm enough to discourage aggressive inventory builds, while deferred values continue to price in stable margins rather than surplus conditions.

Export flows remain a key stabilizing factor, while domestic demand is steady but seasonally capped. End users appear comfortable with coverage, and producers continue to show patience on forward sales.

Absent a shock to production or a shift in export economics, near-term trade is likely to remain rangebound, with spreads and calendar structure continuing to lead price discovery.

Summary

Ethanol futures closed January on a softer note, with CU Feb settling at $1.590, modestly lower but still well supported relative to early-month levels. Production remains steady near 1.13 MMbpd, utilization is stable, and market structure continues to point toward balance rather than excess.

As February begins, the market remains constructive but measured — supported by fundamentals, yet mindful of seasonal demand limits.

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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