SUGAR LEAVES A SOUR TASTE ON PRODUCERS’ BALANCE SHEETS
In the world of commodities, sugar is often described as one of the more freely traded agricultural products, with relatively limited government interference compared with grains or dairy.
Yet despite its openness and global liquidity, the sugar market is currently delivering disappointing financial returns for many producers.
For growers, the economics of sugar production are fundamentally long term. Once planted, sugarcane is expected to generate returns over a cycle of three to seven years, depending on ratoon management and agronomic conditions. Sugar beet operates on a shorter cycle, but the capital intensity of milling infrastructure remains the same. A mill built next to cane or beet fields is not a seasonal investment – it is a multi decade commitment that requires stable and attractive average margins over time. When prices trade below the cost of
production, the entire value chain feels the strain.
A MARKET FOCUSED ON SURPLUS – AND IGNORING WEATHER RISK The projected global surplus for 2025/26 – estimated at 2 to 3 million metric tonnes – and expectations for another surplus in 2026/27 in the range of 2 to 4 million tonnes have kept international sugar prices under persistent pressure. The market appears complacent, pricing in comfortable supply without assigning meaningful risk premiums for potential weather disruptions.
History suggests this may be risky. A severe frost or drought in Brazil, or a disappointing monsoon in India,
could rapidly shift the global balance sheet. Sugar markets are notoriously reactive to weather events, particularly in key producing regions.
BRAZIL: TIGHTER STOCKS AND ETHANOL ECONOMICS Brazil’s 2025/26 Centre South cane harvest concluded with approximately 606 million tonnes of cane and 40.4 million tonnes of sugar – slightly lower cane volumes and broadly similar sugar output compared with the previous crop. The North/Northeast region remains in progress but is expected to produce roughly 500,000 tonnes less sugar, as mills favour ethanol amid stronger fuel margins.
The new Centre South harvest will begin around mid March, with sugar and ethanol stocks projected to be extremely tight – potentially near zero by the end of March. This raises a critical question: will weather conditions permit a smooth and rapid start to crushing?
Current economics favour ethanol. Domestic ethanol prices are running roughly 20% above sugar parity, incentivising mills to maximise ethanol output at the start of the campaign. This decision directly influences global sugar availability.
Brazil’s ethanol story is increasingly shaped by corn. Corn based ethanol
24 | ADMISI - The Ghost In The Machine | Q1 Edition 2026
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