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AMIS Market Monitor

last release: July 2018

Ethanol Update

Chart description

Chart description

The ethanol margin gives an indication of the profitability of ethanol production from maize in the United States. It uses current market prices for maize, Dried Distillers Grains (a valuable by-product of maize-based ethanol production) and ethanol, with an additional $0.55 per gallon of production costs. 

  • Maize prices dropped sharply in June as did DDGs.
  • DDGs price remained at a strong premium to maize.
  • Both RBOB gasoline and ethanol futures declined, leaving the ethanol/RBOB price ratio near energy equivalence.
  • Production margins rose modestly as costs fell more than receipts.
  • The annualized production pace for June rose to 16.4 billion gallons, a pace second only to November of 2017.
  • The EPA published its proposed renewable fuel volumes for 2019 which included holding the mandate available to maize-based ethanol at 15 billion gallons. However, the issuing of compliance waivers for small refineries has recently lowered effective requirements and introduced significant uncertainty into the compliance market.
  • Compliance certificates (RINs) associated with maize ethanol have fallen by 75 percent since October of 2017.