Chicago ethanol futures closed at US$2.05 a gallon on 16 October, up 29.13 per cent since January and 22.02 per cent on a year earlier. The gain came even as American farmers gathered the second-largest corn crop on record.

The reason lies at the bowser rather than in the field. The war with Iran has pushed petrol far above ethanol. That spread has turned a corn-based additive into a cheap source of fuel and lifted blending to records.

The shift is global. Brazil and Indonesia have raised or introduced blending mandates this year. In Australia, the oil shock has revived a long-running debate about a national ethanol mandate.

What the benchmark measures

The Chicago contract tracks ethanol in the US Midwest, home to most American corn-based plants. Blenders mix it into petrol, mostly at 10 per cent (E10). A smaller share is sold as E15.

Plant-gate prices confirm the move. The US Department of Agriculture (USDA) put Illinois rail ethanol at about US$2.10 a gallon in the week to 16 October. That is roughly 30 cents above a year earlier.

The Iran war rewrote the blending maths

Petrol drove the 2026 rally. Brent crude rose from about US$72 a barrel in late February to above US$110 within weeks as the Strait of Hormuz closed.

Ethanol became a bargain. The Renewable Fuels Association (RFA) said it traded nearly US$1.50 a gallon below gasoline blendstock in May. Blenders pushed the average ethanol content of US petrol to a record 11.29 per cent that month.

Washington added support. The Environmental Protection Agency (EPA) allowed summer E15 sales through an emergency waiver. On 27 March it finalised record renewable fuel volumes for 2026 and 2027, including 15bn gallons of conventional biofuel.

Those mandates lifted credit prices. The US Energy Information Administration (EIA) said ethanol credits, known as D6 RINs, reached US$2.37 on 4 June, close to their 2021 record.

A quieter month, but crude is climbing again

The past month was calmer, with prices up 0.99 per cent on ample supply. EIA data showed US output of 1.065m barrels a day in the week to 9 October. Stocks were 23.9m barrels, 5.8 per cent above a year earlier.

Corn has also weighed on the market. In October, the USDA raised its US crop forecast to 16.03bn bushels and cut its season-average farm price to US$4.70 a bushel. December corn futures settled at US$4.78 on 15 October.

The 1.86 per cent weekly gain tracked crude. Brent settled at US$109.86 on 16 October, its highest close since May, after a missile was aimed at Saudi Arabia's Yanbu port.

A global push to blend more

Brazil, the main rival exporter, moved first. In July it raised its mandatory petrol blend from 30 to 32 per cent for 180 days. The USDA said this could leave Brazil with less ethanol to export.

Asia is following. Indonesia introduced a 5 per cent blend in July in seven regions, including Jakarta and Bali. The USDA named Canada, the EU, the UK, Colombia and the Philippines among the markets lifting import demand. US exports ran 12 per cent ahead of last year's record pace in the first half.

Aviation is a newer outlet. The EU's ReFuelEU rules require 2 per cent sustainable aviation fuel (SAF) from 2025, rising to 6 per cent in 2030. Alcohol-to-jet technology, which turns ethanol into jet fuel, is an eligible route.

Australia: a small market reopens an old debate

Australia's ethanol market is tiny. Only New South Wales and Queensland require ethanol blends. Ethanol made up about 2.6 per cent of NSW petrol sales and 2 per cent in Queensland last year. The mandates are 6 and 4 per cent, the North Queensland Register reported.

Producers say capacity sits idle. Wilmar's Sarina distillery and Manildra's Bomaderry plant can make about 360m litres a year but deliver about 180m. Australia exported more than 150m litres of ethanol last year.

Metric

Value

Price (USD/gal)

2.0500

Daily change

+0.0050 (+0.24%)

Weekly change

+1.86%

Monthly change

+0.99%

Year to date

+29.13%

Year on year

+22.02%

Price date

16 October 2026