Why the World is Using More Ethanol
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Boost to Ethanol Trading

Rising demand has shown a positive effect on Ethanol futures volumes at CME Group with the Chicago and European contracts seeing steep gains. The largest ethanol market remains in Chicago where volumes have increased 40% in the 12-month period up to and including April 2024 compared to the prior 12-month period. However, European Ethanol volumes traded on the key Rotterdam hub have also increased by around 15% over the same period.

Global Biofuel Futures Vol and OI

Ethanol as a Transportation Fuel

Global consumption of ethanol is determined by several factors, including policy and ethanol’s value as a transportation fuel. Since 2009, the European market has been steadily increasing the blending mandate for gasoline with more countries selling larger volumes of the 10% ethanol content in gasoline, a doubling of the prior 5% level which existed for many years. E10 gasoline is available in more than 15 European countries and this number is expected to grow in the coming years.

In the U.S., ethanol, primarily made from corn, is the most prominent alternative transportation fuel. The largest of these markets is E10, gasoline which contains 10% ethanol fuel, though progress has been made to increase the blend level to E15.

E85 is a high blend of 51% to 83% ethanol that can only be consumed in flexible-fuel vehicles (FFVs); however, it can use every blend level from E0 to E85. According to the Greenhouse gasses, Regulated Emissions, and Energy use in Technologies (GREET) model, which assesses a range of life cycle energy, emissions, and environmental impact challenges, ethanol reduces life cycle greenhouse gas emissions (GHG) on average by 40% compared to petroleum based gasoline.

U.S. Ethanol Exports Expand Rapidly

As consumption of fuel ethanol has grown, so too has the role of U.S. ethanol in the global market with the expansion of exports rising on a month over month basis. Canada, Europe and Asia are the largest export destinations from the U.S. In the case of Europe, exports of fuel ethanol in the past 12 months up to and including March 2024 have increased from an average of 450,000 barrels per month to just over 650,000 barrels per month.  

US Fuel Ethanol Exports

Uncertainty Continues

Trading volumes in Ethanol futures at CME Group have steadily been rising, reflecting the growing uncertainty in the market both in Europe and the U.S. The continued concern in the outlook around supply and demand could prompt more market participants to turn to the financial markets to manage risk. The introduction of agricultural practices such as the usage of corn-based ethanol in products like Sustainable Aviation Fuel could drive further demand. This trend toward greater risk management continues as both companies and countries seek to reduce the carbon intensity of the feedstocks that they choose for the transportation sector. 

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