Insight Focus
US ethanol production remains steady through 2026. Rising profits and new marine fuel demand could boost corn usage and benefit rural plants. Trade tensions with Brazil and slowed biofuel projects highlight sector uncertainties despite oil majors’ continued investments.
EIA Projects Stable US Ethanol Production
According to the October 7 Short-Term Energy Outlook from the US Energy Information Administration (EIA), forecasts for 2025 and 2026 fuel ethanol blending and exports were unchanged from the previous report. Fuel ethanol production also remained unchanged.
The EIA said fuel ethanol production is expected to average 1.06 million barrels per day this year and next year, unchanged from the September report. Production also averaged 1.06 million barrels per day in 2024.
On a quarterly basis, the EIA currently expects fuel ethanol production to average 1.05 million barrels per day during the fourth quarter of 2025. In 2026, production is forecast to average 1.05 million barrels per day in the first quarter, 1.07 million barrels per day in the second quarter, 1.05 million barrels per day in the third quarter, and 1.08 million barrels per day in the fourth quarter.
Source: EIA
Net imports of fuel ethanol are expected to average 130,000 barrels per day in both 2025 and 2026, unchanged from 2024 and from the September outlook.
Ethanol Gains from Rising Margins and Marine Fuel Demand
Profit margins are seeing a slight uptick, giving the US ethanol industry a modest boost. A Kansas State University agricultural economist says the sector remains a major corn consumer, using about 35% of the nation’s crop each year.
Global shipping is also eyeing lower-carbon fuels, and the International Maritime Organization’s proposed Net-Zero Framework could open a significant new outlet for US ethanol, biodiesel and renewable diesel.
Geoff Cooper of the Renewable Fuels Association (RFA) noted that oceangoing vessels burn roughly 70–80 billion gallons of fuel annually. Capturing just 5% of that market with US biofuels could create demand for 4–5 billion gallons, translating to more than 1.5 billion bushels of additional corn use — a potential economic boost for rural plants and farms.
The Department of Energy estimates that corn ethanol can cut marine GHG emissions by about 61%, soy biodiesel by 66%, and soy renewable diesel by 60% compared with bunker fuel, enabling ships to earn compliance credits if the rule is implemented as proposed in 2027.
US Ethanol Production Rises as Maintenance Ends
US ethanol production moved slightly higher over the past week as more facilities concluded seasonal maintenance. The EIA reported production at 1.074 million barrels per day, the highest average in more than a month — up 3,000 barrels from the previous week and 32,000 barrels from a year earlier.
Source: EIA
Iowa State University’s Center for Agricultural and Rural Development said estimated operating margins for the typical Iowa plant remained solidly positive. Demand signals were mixed, with ethanol stocks at 22.628 million barrels, down 92,000 barrels from the previous week but up 353,000 barrels year over year.
The Renewable Fuels Association noted that net ethanol inputs purchased by refiners and blenders rose even as gasoline supplied to the market declined. Ethanol exports averaged 108,000 barrels per day, down 30,000 barrels from the prior week and 32,000 barrels from a year ago. The EIA said it will continue issuing weekly updates until further notice during the partial shutdown of the US federal government.
Source: EIA
US-Brazil Ethanol Trade Talks Progress
The Brazilian president has established a roadmap that could lead to a reduction in tariffs on US ethanol amid an ongoing trade dispute, according to local media reports. Brazilian and US officials were scheduled to meet on October 16, with Brazil expected to consider US requests to reinstate an ethanol quota system or create new incentives for US imports, Brazilagro reported.
Since 2020, Brazil has maintained an 18% tariff on US ethanol, a policy that has frustrated US producers, given that Brazilian ethanol can enter the US with a 2.5% de minimis tariff. Previously, US producers could ship up to 600 million litres of ethanol duty-free under a tariff-rate quota system, above which the tariff rose to 20%.
The Office of the US Trade Representative launched a trade investigation into Brazil in July, citing high tariffs on US ethanol exports, digital payments restrictions, unfair trade practices, corruption and deforestation concerns.
Biofuel Project Rollouts Stall
Just last year, several oil majors appeared to be betting heavily on biofuels, but momentum seems to have slowed in project development in recent months. Despite strong demand for biofuels — as hard-to-abate industries seek to decarbonise — increased uncertainty and other logistical challenges have caused new project rollouts to stall in several regions.
By the end of 2024, several oil majors had increased investments in biofuel development, with a focus on sustainable aviation fuel (SAF).
At that time, 43 projects were expected to be operational by 2030, according to Rystad Energy. Oil and gas companies such as ExxonMobil, Chevron, BP, Shell and TotalEnergies had all committed to biofuel production, representing a combined capacity pipeline of 286,000 barrels per day.
