USDA holds 2026-27 corn-for-ethanol at 5.6 billion bushels, trims 2025-26 to 5.55 billion in July WASDE

The USDA left its corn-for-ethanol forecast for the 2026-27 marketing year untouched at 5.6 billion bushels in the July WASDE, released July 10. That forecast sets the demand baseline for anyone buying or blending ethanol into next year's gasoline pool. Steady demand, steady grind.

The agency did nudge the current year down. For 2025-26, corn use in fuel ethanol dropped to 5.55 billion bushels, from 5.575 billion a month earlier. USDA pinned the cut on actual grain crush and ethanol production data coming in soft. It is a small revision, about 25 million bushels, but it points to a plant fleet running a touch below what the forecast assumed. Watch whether August confirms the slower grind or writes it off as noise.

Brazil and the sugar knot

Brazil told US trade negotiators it will keep ethanol off the table. Development Minister Márcio Elias Rosa said after the latest round with the USTR that Brasília wants the talks focused on tariffs and will not let ethanol get carved out from the country's sugar chain.

For a US operator that reads one way. Brazil is the second-biggest ethanol player on the planet, and the two countries have traded tariff jabs on the fuel for years. If ethanol stays walled off from the broader deal, the current friction on cross-border ethanol flows does not get resolved in this round. That keeps a question mark over import and export arbitrage on both sides, which is the part that eventually touches US corn ethanol pricing.

Jet fuel and contrails

The US flew a business jet on neat sustainable aviation fuel to measure how the fuel changes contrail formation. Neat means no petroleum jet fuel in the blend, which is well past the current commercial cap. The test is about contrail pollution, not about a mandate landing tomorrow.

It matters at the edges. SAF policy leans on lifecycle carbon math, and contrail effects are the piece the models handle worst. Cleaner data could shift how SAF gets credited down the road. Nothing here changes a gallon of diesel or gasoline this quarter.

What to watch

The 25-million-bushel cut to 2025-26 corn use is the live number. If plant output keeps running under forecast, next month's WASDE could take it lower again, and that feeds through to corn basis and ethanol margins.

On trade, the open question is whether ethanol stays outside the US-Brazil tariff deal or gets dragged back in before a final agreement. And the WASDE stress test comes when the August report either confirms the softer grind or reverses it.