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.
“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.”
U.S. ethanol exports hit record high levels in 2024 with 1.91 billion gallons of ethanol exported at value of $7.5 billion but policy uncertainty continues to cloud the market outlook.
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.