Ethanol Price

 

Ethanol is a biofuel, implying it is produced from biomass, also referred to as living materials, plant-based resources, or organic matter.

 

Quick Overview of Ethanol

✔️An overview of ethanol
✔️Interesting facts about the history of ethanol since 1826
✔️The production of ethanol
Trading ethanol as a commodity
Drivers of the price of ethanol
Uses of ethanol

 

An overview of ethanol

Ethanol is the most common type of biofuel worldwide. Other types of biofuels are, amongst others:

• Biodiesel, is made from resources such as animal fats, recycled cooking oil, and soybean oil.
• Biogas is manufactured from organic matter, such as food waste, agricultural waste, and animal waste, which are broken down ‘by micro-organisms in the absence of oxygen, in a process called anaerobic digestion,’ according to

 

Biofuels like ethanol, also called ethyl alcohol, grain alcohol, or simply alcohol, are renewable fuels, meaning that the organic matter, such as corn and sugar cane, from which they are produced can be regrown and harvested in a reasonable time.

Contrarily, fossil fuels, such as oil, coal, and natural gas, are non-renewable, because they are made from decomposing animals and plants which occur in the crust of the earth, and which cannot be replenished.

 

Features of pure ethanol

• Boils at 78.5 degrees Celsius (173.3 degrees Fahrenheit).
• A renewable source of energy.
• Ethanol is a liquid that is colourless and flammable.
• It has a burning taste.
• Ethanol is toxic, meaning that in sufficient concentrations it will affect the central nervous system (CNS).
• A low melting point of minus 114.5 degrees Celsius, allows it to be used in antifreeze liquids.
• Contains a pleasant odour reminiscent of whiskey.
• Easy soluble in water.
• A density of 789g/litre at 20° Celsius, approximately 20 percent less than water. Put differently, a density of about 0.79 grams per cubic centimetre at 20 degrees Celsius, compared to 1.0 grams per cubic centimetre for water.

 

Interesting facts about the history of ethanol since 1826

1826: Henry Hennel in Great Britain and SG Sérullas in France independently prepare ethanol synthetically for the first time. Also, alcohol and turpentine are used in the first prototype internal combustion engine.

1850s: Ethanol is used as a lighting fuel in the USA.

American Civil War (1861 – 1865): The use of ethanol declines because it is taxed as liquor to help finance the war.

1876: A German inventor and inventor of the four-stroke internal-combustion engine, Nicolaus August Otto, uses ethanol as a fuel in an early internal-combustion engine.

1906: Tests done by the Department of Agriculture in the USA emphasise the power and economic benefit of ethanol.

1907 and 1908: The US Navy and the US Geological Survey (USGS) perform 2 000 tests on engines fuelled by gasoline and alcohol, concluding that ‘higher engine compression could be achieved with alcohol than gasoline.’[i]

1908: The first car manufactured by the company of Henry Ford is introduced, the Ford Model T. Early models had adjustable carburettors, enabling them to run on ethanol with gasoline as an option.

Ford, who was born and raised on a farm in Michigan in the USA, understood the potential of crops to be changed into alcohol to produce fuels, explaining: ‘We can get fuel from fruit, from the sumac by the roadside, or from apples, weeds, sawdust; almost anything. There is enough alcohol in one year’s yield of an acre of potatoes to cultivate that field for a hundred years. And it remains for someone to find how this fuel can be produced commercially – a better fuel at a better price than we now know.’

Ford referred to alcohol obtained from agricultural products as farm alcohol.

World War I (1914 – 1918): The use of ethanol as fuel is compulsory in Brazil.

1919: The National Prohibition Act bans the sale of alcohol in the USA, effectively ending the production and use of ethanol in the USA.

1933: The prohibition on alcohol is lifted, making it possible to recommence the production of ethanol.

World War II (1939 – 1945): Ethanol is high in demand due to other fuel shortages.

1970s: The current ethanol industry starts when petroleum-based fuel becomes expensive and due to environmental concerns regarding lead in petrol (gasoline).

2005: The first Renewable Fuels Standard (RFS) is enacted as part of the energy policy of the USA, stipulating minimum requirements for the use of renewable fuels, including ethanol, in fuels for vehicles.

2007: The Energy Independence and Security Act of 2007 of the USA requires the usage of renewable fuel to increase steadily to 36 billion gallons (approximately 136 billion litres) per year by 2025.

 

The production of ethanol

The largest global producers of ethanol

The top five global producers of ethanol are:

Top producers in 2025	Top producers in 2025	Production in 2025 (billion gallons)	Production in 2025 (billion litres)	Production in 2025 (billion gallons)	Production in 2025 (billion litres)
USA	USA	13.93	52.73	15.00	56.78
Brazil	Brazil	7.93	30.02	7.50	26.68
European Union	European Union	1.25	4.73	1.30	4.92
China	China	0.88	3.33	0.86	3.26
Canada	India	0.43	1.51	0.82	3.10

 

Notes regarding the table above

• Production figures are indicated in billion US liquid gallons. One US liquid gallon equals 3.78541 (approximately 3.785) litres. For the purpose of this article, the number of gallons was multiplied by 3.785 litres to obtain the approximate production in billions of litres.
• The 2020 figures were obtained from the Alternative Fuels Data Center, which was launched by the S. Department of Energy (DOE) in 1991.
• Statista provided the 2025 figures.
• In 2025, Canada was sixth on the list, producing 0.44 billion gallons (approximately 1.67 billion litres) of ethanol.

In 2025, the total global production of ethanol was approximately 26.06 billion gallons (98.64 billion litres), while the 2025 production amounted to 27.31 billion gallons (103.37 billion litres). The USA and Brazil produced about 84 percent of the world’s ethanol in 2025 and approximately 82.4 percent in 2025.

The biggest share of USA ethanol is produced from corn, while Brazil mainly uses sugar cane.

The USA is also the overall leading producer of biofuels in the world.

The top five ethanol producers in the European Union (EU)

According to Statista, the following five countries are the largest ethanol producers in the EU, which comprises twenty-seven countries.

Country	Production in 2025 (million litres)	Production forecast for 2025 (million litres)
France	1049	1095
Germany	875	950
Hungary	639	640
Netherlands	538	570
Spain	487	480

 

Ethanol production in Africa

The following African countries are, amongst others, ethanol-producing countries:

• Nigeria

Nigeria, located in West Africa, is the continent’s largest ethanol producer with the Nigerian company Unican Industries Limited the largest ethanol producer in Africa.

 

• South Africa

South Africa produces just over 400-million litres of ethanol annually.

 

• Egypt

In addition to current production facilities in Egypt, Business Today Egypt reported in April 2025 that the petroleum and mineral resources minister has announced ‘the development of a $100 million ethanol facility in Damietta Port that will produce 100, 000 metric tons of renewable fuel annually.’

Damietta Port is located 70 kilometres west of the Suez Canal and 13 kilometres south of the Mediterranean coast, on the east bank of the Damietta branch of the Nile.

 

• Mozambique

Aiming to increase the production of ethanol in Mozambique, the South African company Tongaat Hulett announced in December 2025 that it ‘will build an industrial production plant capable of making twenty million litres of ethanol.’ The factory will be built in Xinavane in the province of Maputo.

Molasses, which is a by-product of sugar refining, will be used as raw material to produce ethanol.

 

The production process of ethanol

In the USA, the largest global producer of ethanol, most ethanol is produced from starch-based grains such as corn.

Brazil, the second largest producer of ethanol in the world, produces ethanol mainly from sugar cane.

Two processes, dry milling, and wet milling,[ii] are available to produce ethanol from starch-based grains. The main difference between the two processes is the initial treatment of the grain.

 

• Dry milling process

More than ninety percent of ethanol produced from corn is obtained from the dry milling process.

Firstly, the grain, such as corn, is ground into flour, and subsequently slurried with water to create a pulpy mass, also referred to as mash. Enzymes are added to the mash to change the starch in the mash to sugar. The mash is cooked, then cooled, and transferred to containers in which fermentation takes place, converting the sugar into ethyl alcohol.

After fermentation, the ethyl alcohol (ethanol) is separated from the stillage, which is the residue remaining from the manufacture of the alcohol from the grain.

The ethanol is then distilled, dehydrated, and blended with denaturants to make it undrinkable.

Co-products obtained from this process are distillers grains and corn distillers oil.

 

• Wet milling process

The wet milling process starts by steeping the grain in water, separating the grain into its basic components.

After soaking, the mash is sent through grinders to separate the corn germ. Subsequently, the remaining gluten, fibre, and starch components are further separated. The gluten component is filtered and dried to create animal feed.

The remaining starch is fermented into ethyl alcohol (ethanol), using a fermentation process similar to the one used in the dry mill process.

In Brazil, ethanol is produced from molasses, which is a by-product of sugar-producing from sugar cane.

The molasses is diluted with water as a solvent, then sent through a fermentation process in which the molasses is converted into ethanol and CO2. The ethanol is then separated from the CO2 by using distillation.

A much less common process to produce ethanol is called cellulosic ethanol production. This process is more complex than the other ethanol production processes. Feedstocks (raw materials), referred to as cellulosic biomass, used in this process are trees, such as willow trees, grasses like switchgrass, and crop residues.

Ethanol can also be produced from other sources such as grain sorghum, wheat, sugar beet, potatoes, barley, and rice, to name a few.

 

Trading ethanol as a commodity

To trade ethanol as a commodity, the services of a regulated and professional commodity broker are required.

Similar to most other commodities, ethanol can be traded with derivatives, such as futures contracts and options contracts.

 

• Ethanol futures

Ethanol futures are available for trading on the Chicago Board of Trade (CBOT®), a division of the Chicago Mercantile Exchange (CME). The contract is available in 29 000 gallons of ethanol, which is about one freight car (railcar) of ethanol in the USA.

At expiry, the futures contract is physically settled by the delivery of the ethanol.

Ethanol futures are also traded on the Intercontinental Exchange (ICE).

 

• Ethanol options on ethanol futures

It is also possible to trade ethanol options on the CBOT.

Similar to futures contracts, options contracts have an expiration date. An options contract also has a strike price (exercise price), which is the agreed-upon price at which the quantity of ethanol may be purchased (regarding a call option) or sold (with regard to a put option) by the option holder until or at the expiry date.

On ethanol call options traders pay a price referred to as the premium to buy contracts. An ethanol options contract succeeds only if the price of ethanol futures exceeds the strike price by an amount greater than the premium paid for the contract.

 

• Publicly traded companies that have exposure to ethanol prices

There are various companies that have exposure to ethanol prices.

The names of and information of these companies can be obtained from a chosen commodity broker, enabling an investor/trader to decide which shares to trade with.

 

 

Drivers of the price of ethanol

• Supply of major sources

The supply of major sources of ethanol – corn in the USA, and sugar cane in Brazil – can have an impact on the price of ethanol. For example, recent drought in Brazil reduced the quantity of sugar cane available for ethanol production, causing a decline in the production of ethanol and subsequently a rise in price.

 

• Transportation logistics

Currently, ethanol is mainly transported via trucks, railroads, and barges. Obstacles (severe weather, labour strikes) in the supply chain can delay transportation and cause shortfalls in supply.

 

• Correlation between crude oil and petrol (gasoline) prices and the price of ethanol

Ethanol is a substitute commodity, implying that when crude oil and fuel prices increase considerably, consumers will likely use alternative fuels containing ethanol. This increase in demand should drive ethanol prices higher. Although, the opposite is also true.

 

Uses of ethanol

Ethanol is an effective solvent, used in varnish, paints, lacquers, and cleaning products.

It is used as the intoxicating ingredient in suitable dilutions in various alcoholic beverages such as wine, whiskey, and beer.

Ethanol is used in the synthesis of other organic chemicals.

Antifreeze contains a mixture of ethanol and water.

It is used as an astringent or preservative in several cosmetics and beauty products.

Concerning medicine and healthcare, ethanol is used as an antiseptic for sterilising wounds, as an ingredient in cough syrups, and tonics, and in the manufacturing of chloroform.

Ethanol is used as an additive to fuel (petrol/gasoline) used in vehicles. In the USA, gasoline (petrol) with a 10 percent ethanol content is referred to as E10, while gasoline comprising 15 percent ethanol is called E15.

It is estimated that approximately 12.7 billion gallons of fuel ethanol were consumed in the USA in 2025.

 

Note: This article does not constitute investment, financial, or trading advice. Please obtain the advice of a professional and regulated commodity broker before making trading and investment decisions.

 

[i] Accentuations in quotations are by the article writer.

[ii] Information obtained from the Renewable Fuels Association, the leading trade association for the ethanol industry in the USA.