Exports Remain Key to U.S. Ethanol Industry Growth in 2025

Growing global demand for ethanol positions the industry for continued success, but policy uncertainly clouds market outlook

/EIN News/ -- DENVER, Feb. 13, 2025 (GLOBE NEWSWIRE) -- The U.S. ethanol industry is positioned to continue capitalizing on growing global demand for ethanol, but export market headwinds could be on the horizon. U.S. ethanol exports soared to record levels in 2024. Domestic producers shipped more than 1.9 billion gallons to customers abroad last year. However, policy uncertainty at home and abroad continues to cloud the market outlook for biofuels. 

Biofuel inclusion or blending rate policies in Canada, Europe and Colombia, which are key buyers of U.S. ethanol, will likely determine if the strong pace of exports continues this year. Shifting political sentiment abroad could result in lower ethanol inclusion rates and imports from domestic producers if international buyers rollback low-carbon policies or miss biofuel targets.

Despite those potential concerns, the export market still offers the most promising opportunity to drive U.S. ethanol demand in 2025, according to a new report from CoBank’s Knowledge Exchange. Higher ethanol blend rates for U.S. gasoline and nationwide approval of year-round E15 sales would provide a slight boost to domestic sales, but not enough to substantially increase overall demand. 

“Ethanol used for higher level blends is expected to increase annually in the U.S., but it constitutes only a small portion of overall ethanol demand due to the market’s size,” said Jacqui Fatka, farm supply and biofuels economist with CoBank. “And without significant investments in infrastructure that enable retailers to change pumps or signage, nationwide E15 sales won’t dramatically move the needle in the near-term. Currently, the best opportunity to increase demand in 2025 remains in the export market.”  

Higher crude-oil-to-corn-price ratios, paired with low-carbon fuel standards in Canada’s Clean Fuel Regulations and Europe’s Renewable Energy Directives, have created strong demand for U.S. ethanol. The U.S. and Brazil continue to produce around 75% of global ethanol supply. However, Brazil uses most of its own ethanol domestically and is not expected to compete with U.S. for exports any time soon.

Canada has been the top destination for U.S. ethanol in both volume and value for the last four years. While Canada has a national blending mandate of 5% ethanol in gasoline, several provinces require higher rates. Ontario’s mandate will rise to 11% in 2025 as it continues toward its goal of reaching E15 by 2030. But the potential for trade disputes or changes in Canada’s government loom large and could disrupt the flow of U.S. ethanol into Canada. 

The EU saw substantial growth in U.S. ethanol imports last year due to growth of the gasoline pool and expansion of E10 and E85 in some member states. Exports in 2024 were up 280% from September to November compared to the same period in 2023. India has also increased its nonfuel ethanol imports, which increased 84% year-over-year from September to November in 2024. 

In the U.S. market, ethanol blend volumes follow gasoline demand, which is projected to be flat in 2025. Increased adoption of electric vehicles has resulted in a slight drop in gasoline demand, but not as much as ethanol producers originally feared. Domestic ethanol demand has benefited from workers returning to the office and the overall strength in employment, as well as moderate retail gas prices. 

Read the report, Ethanol Poised for Success if Exports Sustain.

About CoBank
CoBank is a cooperative bank serving vital industries across rural America. The bank provides loans, leases, export financing and other financial services to agribusinesses and rural power, water and communications providers in all 50 states. The bank also provides wholesale loans and other financial services to affiliated Farm Credit associations serving more than 77,000 farmers, ranchers and other rural borrowers in 23 states around the country.

CoBank is a member of the Farm Credit System, a nationwide network of banks and retail lending associations chartered to support the borrowing needs of U.S. agriculture, rural infrastructure and rural communities. Headquartered outside Denver, Colorado, CoBank serves customers from regional banking centers across the U.S. and also maintains an international representative office in Singapore.

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