LatAm Agribusiness "S&E update: Sweetening sugar, sour ethanol" Enfeldt

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LatAm Agribusiness "S&E update: Sweetening sugar, sour ethanol" Enfeldt

Global Research

20 July 2026ab

LatAm Agribusiness Equities

AmericasS&E update: Sweetening sugar, sour ethanol

Energy

Matheus Enfeldt

Sugar recovery ahead, ethanol oversupply to persist Analyst

Both sugar and ethanol have entered a sharp downcycle, leaving the Brazilian matheus.enfeldt@ubs.com

S&E sector increasingly overlooked by investors as companies are unlikely to +55-11-2767 6975

generate cash this year under this challenging backdrop. Looking ahead, we believe Victor Modanese

sugar markets are moving toward a more balanced global supply-demand Associate Analyst

environment that should support prices improving later this year, while ethanol victor.modanese@ubs.com

remains exposed to a structural oversupply driven by growing corn ethanol +55-11-2767 6008

production. We model a sugar price of 16.0cpp in 2026/27, 17.4cpp in 2027/28. Tasso Vasconcellos

For the biofuel, we expect ethanol prices to remain pressured near term Analyst

averaging R$2.4/l in 2026/27, increasing to R$2.5/l in 2027/28 onwards. tasso.vasconcellos@ubs.com

+55-11-2767 6683

Sugar prices remain stuck near cycle lows... Figure 1: Sugar price estimate (cpp)

#11 has remained pressured at ~14-16cpp, which is below the ~18cpp cash cost of

the lowest-cost producer - Brazil. In our view, this is due to a combination of a slight ice

oversupply in 2025/26, muted demand particularly in China, a near-term trade flow

surplus given strong Brazilian exports coupled with destination countries operating mate esti

with below-average inventories, low ethanol prices which limit how long Brazilian (cp

producers can operate max ethanol, and a net short positioning from funds. r pr

… but supply deficits should support a recovery

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