Bioethanol: Cycles

Boom, bankruptcy and the price sandwich between crops and petrol

Ethanol trades between two anchors: the feedstock (maize, cane or rice) sets the floor and petrol sets the ceiling, because blenders will not pay much over energy and octane value without a mandate. Mandates and credits (RINs, LCFS, CBIOs) fill the gap. In the US, margins swing with the maize-ethanol crush spread; in Brazil, mills switch between sugar and ethanol; in India, the government sets prices by feedstock and decides each year which feedstocks may be used. Droughts, oil price shocks and policy changes cause the big moves.

US: ethanol price x about 2.9 gallons plus DDGS and corn oil per bushel, minus the maize price and gas cost. India: Rs 68.86 per litre maize-ethanol price against about Rs 56-63 per litre of maize at Rs 2,400 per quintal before DDGS credit (derived, indicative), which is why AIDA calls grain economics stressed.

Booms and busts

1. 2006-2008

   US mandates (2005 and 2007 laws) and high oil prices triggered a plant-building boom; maize and food prices spiked, then the financial crisis bankrupted several producers.

   not retrieved; maize roughly doubled (maize tile)

2. 2012

   The US drought cut the maize crop; ethanol plants idled on negative crush margins while mandates held demand.

   not retrieved (maize tile describes the drought)

3. 2020-2022

   Covid cut petrol demand and ethanol output; the 2021-22 commodity spike and war in Ukraine then lifted ethanol, maize and petrol together.

   not retrieved in sources used

4. Dec 2023-2024

   India limited cane juice and B-heavy molasses for ethanol and paused FCI rice, cutting the blend rate to about 11.5% expected for 2024; maize became the main feedstock.

   blend target E20; USDA forecast 6.35 billion litres output in 2024 (USDA FAS GAIN IN2024-0024)

5. Oct 2026

   OMCs barred sugar-based ethanol from the ESY 2026-27 tender after weak rains in Maharashtra and Karnataka, and cut the maize incentive.

   maize ethanol Rs 68.86 per litre, down from Rs 71.86; FCI rice Rs 60.32; C-heavy Rs 57.97 (ThePrint, Oct 2026)

What drives the cycle

• Mandates and credits. RFS volumes and RIN prices, Brazil's blend level and CBIOs, India's OMC prices and EU RED targets decide most demand and margins.
• Feedstock harvests. US maize yields, Brazil's cane crush and Indian monsoon-driven sugar output move feedstock costs and, in India, which feedstocks are allowed.
• Oil and petrol prices. Petrol sets ethanol's value outside mandates and Brazil's hydrous parity at about 70% of the petrol pump price (indicative).
• Grain stock policy in India. FCI rice sales price and volume make rice ethanol viable or not; 6.35 Mt was sold in 2025-26.

Metrics to track