The ethanol tender that India’s oil marketing companies opened on 16 October asks for about 1,100 crore litres for November 2026 to October 2027 (BPCL e-tender 26985). After preference for cooperative sugar mills and plants with long-term contracts, it allocates the rest from the cheapest feedstock upwards: C-heavy molasses at Rs 57,970 a kilolitre, FCI rice at Rs 60,320, damaged grain at Rs 64,000 and maize, at Rs 66,070 plus a Rs 2,790 incentive, last. An earlier piece on this site set out the tender’s changes. This one asks a narrower question: can a maize distillery protect itself by running a grain-trading desk alongside the plant, buying maize when it is cheap and selling what the oil companies don’t take to the poultry and animal-feed industry?

How much to trust it. Tender terms are read from the tender document. Maize prices and arrivals are Agmarknet’s state-wise and market-level series, January 2019 to 23 October 2026, pulled from its public dashboard API; eNAM’s trade-data service returned server errors for every query and is not used. Plant economics come from a spreadsheet model of an illustrative 200-kilolitre-a-day (KLPD) maize distillery built for this piece, and the yields, conversion costs and storage costs are the model’s assumptions, stated below. DDGS prices are vendor and press quotes, which disagree. Where this piece calculates something, it says so.

Why a maize distillery needs a second outlet

The tender caps FCI rice at 108 crore litres a quarter in the first three quarters and none in the fourth. That leaves maize to fill whatever molasses, rice and damaged grain do not. Whenever offers exceed the requirement, maize offers are the ones pro-rated. The model assumes a plant gets 70% of what it offers; nothing in the tender fixes that number.

Two rules decide what a distillery can do about it. The tender requires every litre to come from the bidder’s own distillery, with a declaration on each tanker, so buying ethanol from others to resell is out. And FCI rice must be used only for ethanol supplied to the oil companies. Maize carries no such restriction. A distillery can buy, store and resell it, provided traded lots are kept separate from the feedstock it certifies for each delivery.

In Uttar Pradesh the squeeze is tighter. The tender allocates UP on its own, because the state’s excise rules restrict ethanol leaving it, and UP’s sugar-mill distilleries hold large C-heavy molasses volumes that rank ahead of maize.

The two business models

Model A, the pure plant, buys maize at the spot price as it needs it and sells ethanol to the oil companies and DDGS (distillers’ dried grains, a protein feed) to feed buyers. Model B, the integrated plant, buys about half its year’s maize in a price dip, carries it for a season in rented warehouses, uses what its allocation needs and sells the rest, plus third-party maize, to feed mills. Both run the same plant and earn the same tender price.

Model assumptions: maize 390 litres a tonne, 0.8 t DDGS per KL; rice 460 litres a tonne at the Rs 2,390/qtl OMSS price; spot maize Rs 2,202/qtl (Agmarknet all-India, October 2026) plus Rs 120 freight. B buys half its grain at the Nov-2025 to Feb-2026 average of Rs 1,647, pays rent, interest and shrinkage for a five-month carry, and gets Rs 1,500 a tonne more for DDGS sold through its own feed customers. Excludes GST, transport to depots, interest and depreciation.

The break-even is the useful number. At these prices allocated maize ethanol covers its costs until delivered maize reaches about Rs 2,623 a quintal. Any tonne below that is better run through the distillery than sold. The trading desk only handles grain the oil companies have not taken.

What the model earns, and when it doesn’t

This blog’s model: 200 KLPD, 330 tender days, Rs 20 crore fixed costs, Rs 3 crore a year for the trading desk, 50,000 tonnes a year of third-party maize traded. The 2024-25 row uses the Nov-2024 to Feb-2025 buy price, Aug-Sep 2025 resale and Sep-2025 spot. Lower DDGS prices hit both models equally.

In a glut year the desk transforms the plant. The gain grows as allocation falls: at 40% allocation the integrated plant still earned about Rs 42 crore against less than Rs 1 crore for the pure plant, because maize bought cheap and not needed is sold into the lean season rather than left idle. But the last two rows show the risk. Buying at harvest by habit in 2024-25, or in UP’s 2025 window, left the integrated plant behind the plain one.

Buying ahead pays only in a real dip

Agmarknet’s all-India maize price swung from about Rs 2,280 a quintal in January 2025 to Rs 1,610 in February 2026, as record arrivals came in, and back to Rs 2,202 by October 2026. Across the 40 months from January 2023 for which a six-month result can be measured, buying in a given month and holding for six months beat the later price, after warehouse rent of Rs 10 a quintal a month, 10.5% interest and shrinkage, in only 12. The average result was a loss of about Rs 167 a quintal. Months when the price was at least 15% below its 12-month average came only twice since 2019: during the 2020 lockdown, and from October 2025 to February 2026.

Uttar Pradesh has a different calendar. Its spring (zaid) crop brought about 64% of the state’s mandi arrivals in June to August on average over 2023–25, and prices bottomed then at Rs 2,050–2,080. January to April averaged about 10% higher. That makes June to August the UP buying window, but the 2025 window was followed by a national glut that pulled UP prices down to about Rs 1,790–1,900 between February and May 2026. From September to April, mandis in Madhya Pradesh’s Gwalior belt and Rajasthan’s Hadoti region traded Rs 200–700 a quintal below UP, which makes them the natural winter source for a UP plant.

Agmarknet market-level data, arrival-weighted. All UP: about 412,000 tonnes across 137 markets at Rs 2,147. Agmarknet’s arrival totals rise sharply from November 2025, when its new portal went live, so part of the recent jump may be wider market coverage rather than more grain.

The poultry and feed side

Feed is about two-thirds of the cost of producing poultry, and maize is the largest ingredient. Press reports from Namakkal in Tamil Nadu describe poultry farmers paying about Rs 30 a kilo for maize, against Rs 22 a year earlier (DT Next, The Hawk), well above mandi prices, which suggests a retail or delivered-feed basis. An earlier piece on this site traced how ethanol demand fed into egg prices. That demand is what a distillery’s grain desk would sell into.

Source price Rs 1,877, Khargone’s 30-day arrival-weighted average. Freight at an assumed Rs 3 a tonne-km by truck, Rs 60 a quintal for handling and drying, and 30 days’ credit at 10.5%. On 23 October Khargone itself traded at Rs 2,291, so the spread narrows quickly as harvest prices recover. The model plans on half the average markup.

Scale matters for who to sell to. A 200 KLPD distillery uses about 513 tonnes of maize a day, or 1.69 lakh tonnes a year. That equals about 75 layer farms of one lakh birds, roughly 1,240 contract broiler farms or two large integrator feed mills. At 70% allocation the spare maize, about 50,000 tonnes a year, is roughly one feed mill’s intake. Feed mills and large layer complexes buy in rake-size lots; small farms buy 10 to 30 tonnes at a time, often on credit.

In Uttar Pradesh, the buyers that could be confirmed from primary sources are IB Group’s 600-tonne-a-day poultry feed plant and hatchery at Jagdishpur in Amethi (IB Group) and the 100-tonne-a-day PCDF cattle-feed plant at Ambedkar Nagar, leased to the National Dairy Development Board in June 2025 (NDDB). Industry listings and annual reports point to further feed plants run by Godrej Agrovet in Unnao and Chandauli and by Venky’s at several UP sites, but these could not be confirmed from primary sources. By the 2019 Livestock Census, Azamgarh, Barabanki and Amethi held the most poultry in the state (data.gov.in). No published price paid by UP feed mills for maize was found, so the markup for a UP desk is untested.

Rent storage for a season; don’t build it for years

The obvious next step, owning silos to hold two to four years of grain and average down the cost, fails on the numbers. Spread over the maize a plant actually uses at 70% allocation, owned steel silos cost Rs 728 to Rs 1,456 a quintal once capital, operating cost, interest on the stock and grain losses are counted.

This blog’s model, all-India base case: Rs 7,000 a tonne silo capex, 11% cost of capital, 25-year life, Rs 150 a tonne a year to operate, average fill 60%, 1% a year loss of ethanol yield on ageing grain. Maize also gathers aflatoxin risk after 18 to 24 months in store.

The deepest dip since 2019 outside the lockdown bottomed at Rs 1,610, short of even the two-year bar. Rented warehouse space at about Rs 10 a quintal a month, held for one season, does the job without the capital.

What could break it

A 10% fall in maize while a full dip stock is held costs about Rs 26 crore against replacement cost, though the stock still earns a margin if it goes through the distillery, because the ethanol price is fixed for the year. Cheaper imports of maize or DDGS would compress both the dips and the resale spreads. Mycotoxins concentrate roughly threefold in DDGS, so off-spec maize sent to the distillery can produce DDGS unfit for poultry. Mixing traded maize with certified feedstock would breach the tender’s certification rules. And every allocation in this tender is provisional, pending Supreme Court cases on how ethanol is allocated.

The verdict

Pairing an ethanol plant with feed-grain trading is a viable business model, but as a hedge, not a standing bet on grain prices. It earns most when allocations are short and grain is in glut, which is when a pure maize plant does worst. It loses money when the desk buys by habit. The conditions that make it work are a hard trigger for buying, a cap on stock of about half a year’s need, one season of rented storage, sales agreed with two or three large feed buyers before the grain is bought, and stock records that keep traded and distillery maize apart.

Sources and method. Tender terms: BPCL e-tender 26985 (16 October 2026), Annexes I–IV. Prices and arrivals: Agmarknet dashboard API (state-wise price and arrival, and market details for maize), January 2019 to 23 October 2026; the all-India series is this blog’s arrival-weighted average of state prices. FCI rice price: OMSS-D 2026-27 as reported by ChiniMandi. DDGS: Brinda Foods (Rs 13–16k a tonne) and BioEnergy Times (about Rs 13 a kilo, June 2026). Poultry feed costs: ChiniMandi, DT Next. UP buyers: IB Group, NDDB, data.gov.in as linked. UP mandi rules: UP Ordinance 5 of 2023. Yields, costs, freight rates, allocation share and silo costs are this blog’s model assumptions. eNAM data was not available. This post is AI-assisted analysis of public data, not investment advice.

About this article: Researched, written and edited by Umashankar Triplicane Dwarakanathan, with AI research assistance; every figure is meant to trace to the primary source cited. See the Editorial Policy for how sourcing, AI use and corrections work.