Brazil's Ethanol Parity Continues to Drive Sugar Production Mix

São Paulo, February 15, 2026 – The sustained favorable parity between ethanol and sugar prices in Brazil continues to significantly influence the nation's sugarcane allocation decisions for the upcoming 2026/27 season. With crude oil prices remaining relatively elevated and government incentives bolstering biofuel production, Brazilian mills are increasingly prioritizing ethanol output over sugar. This trend, observed over recent seasons, is anticipated to intensify, potentially limiting the volume of sugar available for export. Industry analysts from HiSugar project that up to 55% of the total sugarcane crush could be channeled into ethanol production. While this represents a marginal increase from the current season, it marks a substantial shift compared to five years ago. "The economics are unequivocally clear for the mills," explained Roberto Mendes, a commodities analyst based in São Paulo. "Robust domestic demand for ethanol, coupled with attractive international oil prices, renders ethanol production a more profitable undertaking than sugar for many producers." While this strategic pivot aids Brazil in achieving its renewable energy targets and provides a stable revenue stream for mills, it inevitably tightens global sugar supplies. The decision-making process for each mill is multifaceted, encompassing factors such as local demand, logistical considerations, and international sugar prices. However, the overarching macroeconomic environment strongly favors ethanol. This persistent preference for ethanol production in the world's largest sugar producer is a critical driver contributing to the current bullish sentiment in the global sugar market and underscores the intricate interconnectedness of energy and food commodity prices.