Ethanol Faces Pressure as Gasoline Prices Hit Multi Year Lows

Blending Economics Deteriorate

The steep fall in gasoline prices is directly hurting ethanol's blending margins. While the Renewable Fuel Standard (RFS) ensures mandatory usage, the incentive to blend ethanol beyond required minimums (splash blending) has significantly weakened. This lack of discretionary demand is the main price cap.

Corn Cost Stability

The cost of corn feedstock remains relatively stable, meaning producers are caught in a classic margin squeeze: stable high input costs against falling product prices. Producers must increasingly rely on the profitability of co-products, such as Dried Distillers Grains (DDGs), and export markets to maintain healthy margins.

Export Market Crucial

With domestic demand hampered, exports remain crucial for absorbing US supply. Strong demand from Asian and Latin American markets helps prevent a steeper domestic price decline. Any disruption to export logistics would immediately intensify downward pressure on domestic ethanol prices.