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Resilient Q3 Ethanol Margins Offset Weaker Co-Product Prices, TPH Says

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Q3 ethanol margins averaged $1.05 per gallon so far, exceeding previous expectations despite moderating from the prior quarter, according to TPH Energy Research in a Wednesday note.

The firm said its Midwest ethanol margin indicator eased from $1.15/gal in Q2 but remained above $1.03/gal a year earlier, reflecting continued strength in industry profitability.

Lower co-product prices weighed on margins during the quarter. Falling dried distillers grains prices, driven by weaker soymeal values, reduced the margin indicator by 6 cents per gallon over the quarter, while softer corn oil prices trimmed the margin by another 2 cents.

The ethanol-to-corn spread narrowed by just 2 cents per gallon from the prior quarter as lower corn prices largely offset slightly weaker ethanol prices.

TPH Energy said corn prices declined despite last week's bullish World Agricultural Supply and Demand Estimates report, which lowered year-end corn inventories on stronger exports.

The firm said ethanol exports continue to support the industry and expects US shipments to reach 2.2 billion gallons in 2026, up from 2.0 billion gallons in 2025.

Stronger-than-expected ethanol margins prompted TPH Energy to raise its third-quarter EBITDA forecast for Green Plains (GPRE) to $82 million from the consensus estimate of $69 million.

TPH Energy also expects Green Plains to generate a 19% free cash flow yield in 2026, supported by resilient ethanol margins and favorable export trends.

The brokerage said the improving ethanol market should also benefit Archer-Daniels-Midland (ADM), Aemetis (AMTX) and Valero Energy (VLO).

Price: $16.65, Change: $-0.47, Percent Change: -2.75%

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