Brazil's Sugar Exports Expected to Fall 14% as Ethanol Production Rises

Brazil, the world's leading sugar producer and exporter, is anticipated to cut its sugar shipments by 14.2% in the upcoming 2026/27 season, which commences in April. This shift is primarily driven by high oil prices, which are encouraging mills to divert sugarcane towards ethanol production, as reported by the consultancy Safras & Mercado on Thursday. Safras projects Brazil's total sugar exports for the new season, encompassing both the Center-South and North-Northeast regions, to reach 29 million tons. This marks a significant decrease from the 33.8 million tons exported in the 2025/26 season. The consultancy's report also indicates that Brazil's total sugar production is expected to fall to 40.3 million tons in 2026/27, down from 43.5 million tons in the previous crop year. Conversely, total ethanol production, including that derived from corn, is forecast to increase by 10.7% to 42.58 billion liters. Mauricio Muruci, Safras' sugar and ethanol analyst, foresees the Brazilian government raising the ethanol blend in gasoline from the current 30% to 35% in the latter half of the year. This move could significantly boost demand for anhydrous ethanol. He estimates that each percentage point increase in the blend rate translates to an additional 920 million liters of ethanol needed for Brazil's fuel mix. Brazilian mills possess the operational flexibility to adjust their facilities to produce either more sugar or more ethanol, depending on prevailing market prices. Currently, ethanol offers a more favorable financial return. Should gasoline prices continue to climb, ethanol's profitability would further increase, potentially leading to a greater allocation of sugarcane for ethanol production and, consequently, impacting global sugar supply.