Outlook points to abundant sugarcane supply in Brazil in 2026/27, weighing on prices and increasing ethanol’s competitiveness in the production mix
São Paulo, April 14, 2026 – Expectations of a robust sugarcane crop in Brazil’s Center-South region in the 2026/27 season, with projected production of around 635 million metric tons of cane and sugar output exceeding 40 million tons, are set to reinforce global oversupply and maintain structural pressure on sugar prices, while ethanol regains competitiveness and plays a central role in market rebalancing.
This performance adds to the partial recovery in production across Northern Hemisphere countries such as India, Thailand, and Mexico, expanding the global surplus and consolidating a scenario of structurally lower sugar prices.
In this context, even recent upward price movements — which pushed sugar prices to around 16.1 cents per pound — have lost momentum as geopolitical risk premiums faded and the energy complex retreated, highlighting the limited nature of this short-term support.
“Although macroeconomic and geopolitical factors have driven short-term volatility, fundamentals remain bearish, with ethanol regaining competitiveness as the main adjustment mechanism through reductions in the sugar mix and demand stimulus,” says Lívia Coda, Market Intelligence Coordinator at Hedgepoint Global Markets.
Ethanol has regained competitiveness relative to sugar since late 2025, encouraging adjustments in mills’ production mix. Currently, the sugar mix is projected at around 48%, although the level required to fully balance supply and demand is closer to 44.5%, reinforcing ethanol’s role as the primary lever for market rebalancing.
Still, operational and commercial constraints are expected to limit faster changes in the mix composition, keeping the market in surplus. This imbalance is estimated at least 3.2 million tons, which continues to weigh on prices.
Under this scenario, the effective floor for sugar prices is estimated at around 13.5 cents per pound, based on hydrous ethanol ex-mill prices near BRL 2.2 per liter.
Despite the structurally bearish bias, several factors could introduce volatility into the market. These include potential shifts in the energy landscape and, most notably, climate risks associated with El Niño, whose intensification could affect Northern Hemisphere production during the 2026/27 cycle and contribute to firmer price levels in 2027.
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