Post Early September Rise, Ethanol Prices Start to Fall Forward in the USA

Houston (USA): U.S. Ethanol prices surged initially before facing a partial reversal during the early week of September. Ethanol blending demand saw steady growth, with the Midwest and FOB Houston markets reflecting this trend. U.S. Ethanol production experienced slight declines, while exports dropped sharply. Despite these production challenges and fluctuating demand, efforts to promote Ethanol blending in Latin America and the Caribbean signaled a growing global interest in Ethanol adoption.

According to the U.S. Grains Council, Ethanol prices in the U.S. increased by 3.8% toward the end of the previous week but later declined by 2.1% through Tuesday’s close. FOB Houston Ethanol prices followed a similar pattern, ending last week with a 4.6% increase but dropping by 0.6% through Tuesday, closing at 52.97 cents per liter (200.51 cents per gallon).

Several factors contributed to these price fluctuations. Blending demand continued to rise, with the U.S. Ethanol blending rate averaging 933,000 barrels per day (bpd), an 8,000-bpd increase from the previous week, and 2.9% higher than the same week last year. The four-week average blending demand of 927,000 bpd was also 10,000 bpd above the same period in 2023, indicating sustained Ethanol demand, especially as winter approaches and winter blends are prepared.

Ethanol production in the U.S. dropped by 1% for the week ending August 30, averaging 1.061 million bpd—a 10,000-bpd decrease compared to the previous week’s 1.071 million bpd. However, production was 49,000 bpd higher than the same week in 2023, demonstrating resilience despite the slight decline. Fuel Ethanol stocks also decreased by 1%, reaching 23.354 million barrels, down by 218,000 barrels from the prior week. Despite this drop, stocks remained higher year-on-year, up by 1.733 million barrels.

Ethanol exports saw a significant reduction, averaging 91,000 bpd for the week ending August 30, a 37% decrease from the previous week’s 145,000 bpd. This decline may have contributed to a temporary oversupply in the domestic market. However, exports were still 9,000 bpd higher than the same week in 2023, reflecting continued international demand for U.S. Ethanol.

On the international stage, the U.S. Grains Council made notable progress in promoting Ethanol adoption in Central America and the Caribbean. The third “Cultivando Energía” (Growing Energy) conference, held in Costa Rica, emphasized the region’s commitment to sustainable energy and reducing transportation-related emissions. The U.S. Grains Council's efforts, combined with Taiwan's growing interest in higher Ethanol blending rates, suggest an expanding global market for U.S. Ethanol exports.

Looking ahead, the U.S. Ethanol market may continue to experience moderate price fluctuations due to seasonal blending demand, particularly as winter approaches. Stronger blending mandates and increasing demand for renewable fuels are likely to further drive Ethanol consumption. On the supply side, any production challenges or rising feedstock costs could place upward pressure on prices. However, global efforts to promote Ethanol adoption could help boost export demand and mitigate these supply-side pressures. The future trajectory of the market will likely depend on domestic blending demand and international blending initiatives.