Highlights

  • Chicago ethanol futures fell sharply over the past month, with a tracking quote down 12.75% to $1.78 a gallon.
  • US ethanol output reached 1.143 million barrels a day, a 10-month high, while blending stayed slightly below last year.
  • Green Plains posted record adjusted EBITDA of $118.0 million, with $65.4 million coming from 45Z clean fuel credits.
  • ADM's corn processing unit earned $146 million in operating profit, up $103 million, on robust margins and policy incentives.

Ethanol futures have fallen sharply over the past month, yet several producers have just posted their strongest quarterly results in years. The December Chicago Ethanol (Platts) contract last traded at $1.785 a gallon in a delayed snapshot on 10 November, and a tracking quote showed $1.78 the next day, down 12.75% over the month. The gap between weak prices and strong profits comes down to policy. For Green Plains (NASDAQ:GPRE) and ADM (NYSE:ADM), a federal tax Credit now carries a large share of the earnings.

Which Contract Matters

The most actively quoted US ethanol benchmark is the cash-settled Chicago Ethanol (Platts) contract. The older CBOT ethanol contract remains listed but has limited liquidity, and CME launched physically delivered NYMEX ethanol futures in February 2025. The nearby November contract was unchanged at $1.855 on Volume of only 42 lots, so the near-dated curve is thinly traded.

Supply Outpaces Blending

Output reached 1.143 million barrels a day in the week ended 30 October, up 4.6% on a year earlier. Blending, a proxy for domestic demand, was 899,000 barrels a day, slightly below a year earlier, and inventories stood at 24.434 million barrels, 2.1% higher, with West Coast stocks up more than 21%. Higher output with flat blending is one plausible reason for the weaker futures price, though the data do not prove cause and effect.

Exports offer an outlet. The US shipped nearly 209 million gallons of ethanol and 1.09 million tonnes of distillers grains in September, both above a year earlier.

Corn Costs and Policy Support

Corn is the main feedstock, so margins track the spread between ethanol and corn. December corn closed at $4.48 a bushel on 11 November, down a cent, after Tuesday's rally on a USDA report that cut the 2026/27 crop to 15.893 billion bushels and kept corn use for ethanol at 5.65 billion. If corn keeps rising while ethanol stays put, margins narrow.

Policy is now a large part of industry profits. The Section 45Z clean fuel production credit is a big contributor, and Treasury's regulatory agenda pointed to final rules in November 2026. Those rules could change how much credit each plant earns, depending on its carbon-intensity score.

How the Listed Companies Are Exposed

Green Plains is a pure-play US ethanol producer. Third-quarter adjusted EBITDA reached a record $118.0 million, of which $65.4 million came from 45Z credits net of discounts and costs. Ethanol output fell 11.3% to 174.9 million gallons from eight plants running at 95% utilisation. It has agreed to monetise $250 million to $325 million of 2026 credits and raised its 45Z-related EBITDA guidance to $230–250 million.

ADM is a diversified processor. Its Vantage Corn Processors unit, which includes ethanol, lifted operating profit to $146 million on robust margins and policy incentives. Ethanol is a small part of a group that also crushes oilseeds and trades grain, and ADM lifted its 2026 adjusted Earnings guidance to about $5.50–5.80 a share.

Valero reports a separate Ethanol segment alongside refining, while REX American Resources holds interests in six plants with combined capacity of about 730 million gallons a year.

What Could Change the Outlook

Prices could strengthen if export Demand stays firm, if winter driving and blending hold up, or if final 45Z rules support output in ways the market has not priced. They could weaken if production stays near recent highs against flat blending, or if crude and gasoline fall, since ethanol is priced against gasoline.

What to Watch Next

The weekly petroleum report with production data for the week ended 6 November has been pushed to Thursday by Veterans Day. Friday brings USDA export sales, and Treasury's final 45Z rules remain the main policy event. The November CU contract expires on 30 November, shifting Liquidity to December and January, and REX's fiscal third-quarter results normally follow in early December.