Brazil's key sugar production between the center and south is forecast to reach 40.5 million metric tons in 2026/27

Hedgepoint Global Markets reported on Tuesday that sugar production in Brazil's center-south region is expected to reach 40.5 million metric tons in the new season 2026/27, the same as the previous one, despite a lower?amount being destined to?making sweetener.

Hedgepoint stated that the sugarcane crop will grow from 610 to 630 millions tons. This means a stable sugar production.

Sugar prices are nearing five-year lows in New York, which has led mills to divert sugarcane to ethanol production and less sugar. Hedgepoint expects global sugar surpluses to reach 3.4 million tonne in the next season (October-September), compared to the 2.8 million tonne in the previous cycle.

Hedgepoint estimates that the share of sugarcane expected to be used is down to 48.6% from 50.6% last season.

Livea Coda, an analyst at Hedgepoint, says that the current forward sales of mills and industrial constraints limit the amount of sugarcane that can be used to reduce the global surplus.

She told reporters that there are "physical restrictions" that will not allow us to achieve 46%. Mills had already sold sugar at higher prices in the past and were unwilling to change their positions.

Coda stated that the global sugar markets remain "bearish", despite an oversupply.

She said that a "cheaper solution" for the sector would be to increase demand for hydrous alcohol in Brazil.

"Ethanol?prices?will?need to?adjust to make it more attractive for consumers to choose gasoline over ethanol. This would increase demand for hydrous-ethanol," she said.

Coda stated that some expect sugar mills to crush early in order to secure profits before ethanol production increases further with the harvest.

Center-south Brazil is also expected to see a rise in the availability of ethanol produced from grains and corn.

According to Hedgepoint and Unica projections, the total ethanol production in 2026/27 is expected to be 37.5 billions liters. This represents an increase of 3.5 billions liters or 10.3% from 2025/26. Reporting by Roberto Samora, Writing by Oliver Griffin and Aurora Ellis

(source: Reuters)