Brazil’s Sugar Mills Face Tighter Margins as Costs Rise Heading into 2026/27 Season
According to Brazilian media reports on April 16, the conflict in the Middle East could have been a golden opportunity for Brazil’s sugarcane mills to showcase ethanol as a profitable energy alternative. Instead, the war has so far delivered nothing but uncertainty and challenges to the industry.
With key production costs climbing steadily while sugar prices remain depressed and ethanol prices are expected to slide, profit margins at sugar mills are forecast to tighten further in the 2026/27 harvest. Some sugar producers are likely to post outright losses.
Production Costs at a Glance
Consultancy firm Pecege estimates that the average production cost of raw sugar on an FOB (Free on Board) basis at Brazil’s Port of Santos stood at 15.77 cents per pound during the 2025/26 season. Data from RPA Consultoria suggests that costs at some companies may run closer to 17 cents per pound.
According to calculations by the ynsugar team, 15.77 cents per pound translates to roughly US$347.67 per ton—making Brazil’s raw sugar production cost among the lowest of any country in the world.
A More Expensive Season Ahead
Despite this competitive cost advantage, Brazil’s sugar industry is now heading into a 2026/27 season in which expenses are projected to climb even higher. The main drivers behind the increase include rising diesel prices, which directly affect mill operations, along with the escalating cost of fertilizers applied to sugarcane fields.
Taken together, these pressures point to a challenging year ahead for Brazilian sugar producers, who will need to navigate weaker commodity prices alongside mounting operational expenses.
