Ethanol/CEPEA: Mills Prioritize Ethanol Production at Start of Season

According to a report from CEPEA (Center for Advanced Studies on Applied Economics) at the University of São Paulo, the initial two months of the 2026/27 season in Brazil's Center-South region have shown a clear prioritization of ethanol production. Sugar cane mills have focused their efforts on producing ethanol rather than sugar, leading to an increased supply in the market. This production strategy directly impacted market prices. Data indicates that in May, prices for both hydrous and anhydrous ethanol experienced a significant 14% decline. CEPEA noted that this downward trend persisted despite rainfall in the latter half of May, which temporarily interrupted milling operations. CEPEA researchers further explained that during May, some mills, facing an unappealing price environment for both ethanol and sugar, found themselves needing to sell due to financial requirements. Consequently, certain sellers increased their participation in the spot market. However, other mills attempted to hold onto their stocks, anticipating a future price recovery.