Ethanol Price

How the ethanol price has moved across key timeframes. Change is calculated from the opening price of each period to the current price.

Ethanol (ethyl alcohol) is a biofuel produced primarily from corn in the United States and sugarcane in Brazil. It is blended into gasoline to reduce emissions and stretch fuel supply. Most US gasoline contains 10% ethanol (E10). The US and Brazil together account for roughly 85% of global ethanol production. Ethanol bridges the agricultural and energy sectors, making its price sensitive to both corn harvests and gasoline demand.

Henry Ford's Model T was originally designed to run on ethanol, but cheap petroleum sidelined biofuels for most of the 20th century. Interest revived during the 1970s oil crises, and Brazil launched its ProÁlcool program in 1975, mandating sugarcane ethanol blending. The US followed with the Energy Policy Act of 2005 and the Renewable Fuel Standard (RFS), which mandated rapidly increasing ethanol volumes in the fuel supply. US ethanol production surged from 1.6 billion gallons in 2000 to over 15 billion gallons by the mid-2010s. CBOT ethanol futures (now on CME) began trading in 2005.

The vast majority of ethanol is blended into gasoline. E10 (10% ethanol) is standard across most US fuel, while E15 and E85 (flex-fuel) blends are available in some markets. Brazil uses E27 blends and has a large fleet of flex-fuel vehicles capable of running on pure hydrous ethanol (E100). Beyond transportation fuel, ethanol is used as an industrial solvent, a feedstock for chemicals like ethylene, and in the production of hand sanitizer, beverages, and pharmaceutical preparations.

The United States produces roughly 15 to 16 billion gallons of fuel ethanol per year, overwhelmingly from corn via dry-mill fermentation. Iowa, Nebraska, Illinois, and Minnesota are the top-producing states. Brazil produces approximately 8 to 9 billion gallons annually from sugarcane, with São Paulo state as the center of production. Smaller quantities are produced in the EU, China, India, and Canada from wheat, sugar beet, and other feedstocks. A growing niche is cellulosic ethanol from agricultural residues, though it remains a small fraction of output.

Ethanol prices on the CME are quoted in USD per gallon. Key price drivers include the corn price (feedstock cost accounts for ~60% of production cost), gasoline prices (ethanol competes with and is blended into gasoline), RFS blending mandates and Renewable Identification Number (RIN) credits, seasonal driving demand, plant operating margins, export demand (especially from Brazil and Canada), and ethanol inventory levels tracked by the EIA. The 'crush spread' (the margin between ethanol revenue and corn input cost) is a key profitability metric for producers.

Ethanol exposure can be obtained through CME ethanol futures (contract size: 29,000 gallons), shares in publicly traded ethanol producers (Rex Energy, Green Plains, Pacific Ethanol/Alto Ingredients), or indirectly through corn futures and corn-ethanol spread trades. There are no widely available pure-play ethanol ETFs for retail investors. Agricultural ETFs and energy ETFs provide tangential exposure. The ethanol crush spread is actively traded by commercial hedgers and speculators.