Ethanol Prices Mixed as Demand Rises; US Holds Strong Production Capacity
A renewable biofuel, ethanol is mostly made from crops like corn and sugarcane. It is frequently mixed with gasoline to lessen dependency on fossil fuels and greenhouse gas emissions. The US and Brazil are the leading producers of ethanol globally. Ethanol supports rural economies by creating demand for agricultural products. Its usage continues to grow as countries adopt cleaner energy solutions.
US Ethanol Price Analysis (as of late May 2025)
Current Market Snapshot The price for US Ethanol (FOB Gulf) is $1.871 per gallon.
This represents a 1.9 per cent increase from the prior week's average ($1.836 per gallon).
Compared to last year ($1.918 per gallon), the price has decreased 2.4 per cent (US Grain Council).
Regional pricing Comparisons Ethanol (FOB PNW) is priced at $1.935 per gallon, slightly higher than the Gulf, with a modest 0.3 per cent week-over-week increase but a 4.6 per cent year-over-year decline.
Anhydrous Ethanol (FOB Santos, Brazil) is $2.177/gallon – unchanged from the previous week, but a year-over-year increase of 1.4 per cent.
Hydrous Ethanol (FOB Santos, Brazil) is priced at $1.950/gallon, a 0.9 per cent week-over-week decline and unchanged from the one year ago.
Key Observations
US ethanol prices have rebounded slightly in the short term but remain below last year's levels.
The price spread between US and Brazilian ethanol has widened, with US Gulf ethanol trading at a notable discount to Brazilian anhydrous ethanol.
The widening spread between anhydrous and hydrous ethanol in Brazil and the growing Gulf discount suggest shifting dynamics in global ethanol trade, possibly influenced by supply, demand, or policy changes.
The Pacific Northwest (PNW) ethanol price remains above the Gulf price, but both are down year-over-year, reflecting broader market softness.
Price trends indicate that while there is some short-term upward momentum in US ethanol prices, the market remains under pressure compared to last year, with global competition and regional price spreads playing a significant role in shaping US ethanol's competitive position.
US Fuel Ethanol Production Capacity (as of Jan 1, 2024)
Ethanol production capacity remains highly concentrated in a few key states, with notable variations across regions: Texas leads with 430 million gallons/year (Mgal/y) of capacity.
California and Pennsylvania follow with 128 Mgal/y and 128 Mgal/y respectively.
New York contributes 62 Mgal/y, reflecting a smaller but consistent role in ethanol supply.
PADD2 shows 16,996 Mgal/y capacity.
Total US ethanol capacity is around 18010 Mgal/y.
Source: https://www.eia.gov/petroleum/ethanolcapacity/
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