US Ethanol Prices Hold Steady Amid Seasonal Production Dip

US ethanol prices held steady near $2.00 per gallon in early October 2026, reflecting a broad stability in the Midwest region. Prices ranged from $1.96 in Iowa to $2.18 in Kansas, with producers' margins influenced more by the spread between ethanol, corn, distillers grains, and corn oil than by the ethanol price alone.

Production levels dropped to 1.028 million barrels per day in late September, marking the lowest output in over four months. This decline was attributed to seasonal maintenance and the industry's transition to processing new-crop corn, rather than a shift in demand. Stocks also decreased to a seven-week low of 24.7 million barrels.

The EPA's Renewable Fuel Standard for 2026 and 2027 set obligations at 26.81 billion and 27.02 billion gallons, respectively, maintaining the conventional ethanol requirement at 15 billion gallons for both years. Most growth is expected from biomass-based diesel and advanced fuels, with year-round E15 remaining a policy consideration rather than a confirmed demand driver.

Green Plains (NASDAQ:GPRE) reported a second-quarter net income of $67.1 million, with a consolidated crush margin of $95.1 million, of which $58.7 million came from 45Z production tax credits. Valero Energy (NYSE:VLO), primarily a refiner, saw its ethanol segment contribute $318 million in operating income during the same period.

Looking ahead, factors such as firmer gasoline prices, stronger co-product prices, or higher blending demand could support ethanol margins. Conversely, weaker crude prices, rising stocks, or higher corn costs could squeeze them. Key upcoming data includes the weekly EIA petroleum report, USDA ethanol price updates, and third-quarter results from Green Plains and Valero.