United States ethanol markets moved into the final trading day of August 2026 with two forces pulling in opposite directions. Corn, the industry's main feedstock, rallied through the week and closed above five dollars per bushel for the first time in three years, tightening plant margins as feedstock costs jumped. At the same time, weekly production data pointed to a rebound in the ethanol grind, with output holding above the one million barrel per day mark and export flows continuing to outpace last year.
Weekly ethanol production averaged about 1.112 million barrels per day, up 23,000 barrels from the previous week, and stocks moved higher by about 85,000 barrels to 25.2 million barrels. Even with the build, inventory support kept the market functional as summer driving season demand tapered off. Ending stocks stood almost 12 percent above year ago levels with additions across the Midwest and West Coast. Ethanol exports averaged about 162,000 barrels per day, close to a 26 percent jump versus the previous reading and a reflection of strong pull from Canada, South Korea, India, and the United Kingdom.
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The corn rally reshaped the near term margin picture. December futures traded above the five dollar handle on the strength of large speculative buying, with managed money net long positions climbing near record highs of about 376,500 contracts. Weekly export inspections for corn reached 1.496 million tonnes for the week ending August 27, keeping cumulative 2025 to 2026 marketing year totals about 25 percent above the prior year. For ethanol plants, the corn move erodes some of the margin cushion that had supported record grind rates through the summer, though most Corn Belt plants remained comfortably in positive cash flow at the end of August.
Regulatory risk added another layer. Traders were watching the pending decision from the Environmental Protection Agency on small refinery exemption petitions, since a large batch of exemptions would reduce the amount of ethanol required for blending under the Renewable Fuel Standard. Conventional D6 ethanol RIN values had already fallen sharply earlier in the week on expectations that broader relief would be granted, and further movement will depend on how the agency handles reallocation of any waived gallons.
For procurement teams, the message is to plan for volatility into September. Fuel marketers should confirm short dated ethanol coverage before harvest freight competes with movement into export terminals. Corn buyers in feed, ethanol, and export channels should expect a firmer basis if speculative length holds and the crop condition trend keeps softening. Feed buyers who use distillers grains should keep watching plant utilization, since any margin driven slowdown would tighten DDGS availability across the United States, Mexico, and Vietnam.
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