Rising ethanol demand tightens global sugar supply, India and Brazil shift cane
Ethanol demand is pulling cane away from sugar, with the International Sugar Organization seeing a 262,000-tonne deficit for 2026/27.
The International Sugar Organization projected a 262,000-tonne global sugar deficit for 2026/27 as ethanol demand pulled more cane from food into fuel. It also put global sugar output at 184.9 million tonnes, with weaker production in Brazil, the EU, the United States and Thailand outweighing gains in India. The numbers show how sharply ethanol pricing and cane allocation are now shaping the sugar balance sheet.
India’s sugar industry is warning that if ethanol pricing does not improve, some mills may slow ethanol output and swing back toward sugar production. Molasses-based ethanol could stay near 3 billion liters in 2026/27 if margins do not recover, keeping the country’s blending pool capped even as mills weigh the relative return from crystal sugar. That calculation leaves the market exposed to policy decisions on ethanol pricing, because the same cane can be directed toward fuel or food depending on the spread.
Brazil is moving in the opposite direction, with producers increasing their ethanol focus as El Niño-related weather risk adds uncertainty to cane output. That shift tightens the link between cane supply and fuel demand, because more feedstock is being pulled into the ethanol stream just as weather makes the crop less predictable. For sugar buyers, the result is a thinner cushion on availability and more volatility around exportable surplus.
The split is creating a market where ethanol acts as the balancing valve for cane economics. When ethanol returns improve, mills can divert more feedstock away from sugar; when those returns weaken, the flow can reverse. That dynamic is already visible in India’s molasses pool and in Brazil’s push toward fuel, and it leaves consumers more exposed to weather, pricing and policy shocks across the global sugar trade.
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