Brazil is entering the final stretch of its 2026 sugarcane harvest under exceptional weather conditions that are reshaping mill decisions and could have implications for the global sugar market. Above-normal rainfall across the Center-South is disrupting harvesting and limiting mills' ability to shift more cane toward sugar despite significantly stronger prices. The situation matters internationally because Brazil is the world's largest sugar producer and the second-largest ethanol producer, making changes in its production mix a major variable for global supplies. 

The unusual feature of this season is that economics and weather are pulling mills in different directions. Raw sugar futures climbed more than 21% in August, improving the financial incentive to produce the sweetener instead of ethanol. But high moisture levels in harvested cane are making the crop more suitable for fuel production. Excess moisture encourages vegetative growth and reduces sugar concentration in the plant, while having less impact on its suitability as an ethanol feedstock. 

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Brazil Sends 57.5% of Its Cane to Ethanol as Weather Limits a Sugar Shift

The historical data illustrate how significant the change has been. In the 2026/27 season, through early July, only 42.5% of processed sugarcane was allocated to sugar production, while 57.5% went to ethanol, according to industry group UNICA. That represents a sharp shift from 2025/26, when 50.4% of cane was used for sugar and 49.6% for ethanol. Sugar's share is also below the 48% recorded in 2024/25 and 48.8% in 2023/24.

Brazil's Recent Sugarcane Production Mix

That allocation has major consequences for international markets. Every additional percentage point of Brazil's cane directed toward sugar production represents roughly 750,000 metric tons of additional sugar supply. A shift of just two percentage points toward sugar could therefore translate into approximately 1.5 million additional metric tons reaching the market, highlighting why Brazil's sugar-ethanol production mix is closely watched by commodity traders. 

For much of the season, mills favored ethanol as elevated energy prices linked to the Middle East conflict coincided with previously weaker sugar prices. The recent sugar rally has changed those economics. Fabio Meneghin, a partner at consultancy Veeries, estimated that the current profitability gap is around 20% in favor of sugar, creating a clear incentive for mills to increase sweetener production. Yet weather conditions are preventing them from fully responding to that price signal. 

Brazil Records Its Wettest Winter in at Least 110 Years

The scale of the weather disruption becomes particularly clear in São Paulo state. Piracicaba, a key sugar-producing region, recorded 382 millimeters, or about 15 inches, of precipitation during the 2026 winter, the highest level since at least 1917, according to ESALQ/University of São Paulo data. The previous standout year shown in the historical series was 1927, with 350 mm, or roughly 13.8 inches.

Wettest Winters Recorded in Piracicaba

The unusually wet conditions have already delayed harvesting operations across parts of Brazil's sugar belt. But the impact goes beyond field access and harvesting speed. Moisture is also affecting the characteristics of the cane entering mills, influencing whether processors can efficiently turn the crop into sugar or direct a larger share toward ethanol. Parts of Brazil's sugar-producing region experienced their wettest winter in more than a century, according to the University of São Paulo data cited in the report. 

Those constraints are now showing up in production forecasts. At the beginning of the harvest, the market expected Brazil's Center-South region to produce around 40 million metric tons of sugar. Expectations have since been lowered, and StoneX now sees the possibility that output may not exceed 38 million metric tons - at least 2 million metric tons below the initial projection. 

What happens next could influence the direction of global sugar prices. If Brazilian mills manage to increase the share of cane allocated to sugar, additional supplies could help cap the recent rally. If wet weather prevents that shift - and particularly if it keeps mills from harvesting all available cane - global sugar supplies could tighten further, adding support to international prices. 

Brazil's 2026 season is also a reminder of how closely agriculture, energy and weather markets have become connected. A single crop feeds two major markets - food and biofuels - while mills constantly adjust their production decisions according to commodity prices, energy values, crop quality and weather. This season, however, that flexibility is running into a physical constraint: even with economics favoring more sugar production, historic rainfall may ultimately determine how much Brazilian sugar reaches the global market.