Porto Alegre, July 3, 2026 – The sugar inventory survey for the 2026/27 crop indicates a domestic market that remains relatively tight, despite the partial replenishment observed at the beginning of the cycle. The data show that inventories in Brazil’s Center-South region—the country’s main producing region and the benchmark for domestic sugar pricing—recovered significantly compared to the previous crop, particularly during April and May. However, this improvement is not sufficient to characterize a scenario of abundant supply, as inventory volumes remain consistently below the five-year historical average.
In the VHP sugar segment, the primary product destined for the export market, the initial inventory rebuilding suggests greater physical availability in the very short term. Nevertheless, the fact that inventories remain below the historical average indicates that the market continues to operate under a delicate balance between production, demand and export flows. In other words, conditions have eased compared to the tighter environment of the previous crop, but not enough to eliminate structural supply constraints.
A similar pattern is observed in crystal sugar. Although inventories increased compared to the previous year, the negative deviation from the historical average remains significant, particularly in the projections for June. This behavior suggests that domestic supply remains relatively tight, which tends to limit more pronounced declines in domestic prices, especially during periods of stronger seasonal demand.
Another relevant aspect is the composition of inventories. The larger share of VHP sugar relative to crystal sugar indicates a preference among mills for products with greater export appeal. This reinforces the view that the industry continues to prioritize international arbitrage, taking advantage of export opportunities whenever spreads between the domestic and export markets are attractive. As a result, the relatively smaller share of crystal sugar may restrict availability for domestic consumption, supporting more resilient domestic prices.
The relationship between inventories and exports also deserves attention. Although current inventory levels are sufficient to support shipments in the short term, the market does not exhibit signs of a structural supply surplus. This means that any shocks—such as slower crushing activity, adverse weather conditions or an unexpected increase in international demand—could quickly alter the market balance and generate upward pressure on prices.
In Brazil’s Northeast region, inventories continue to represent only a marginal share of the national balance for both VHP and crystal sugar. Consequently, price dynamics remain heavily dependent on the Center-South, consolidating the region as the primary driver of expectations for Brazil’s sugar-energy sector.
From a strategic perspective, the current scenario suggests a sugar market with a predominantly neutral to moderately bullish bias. Although inventory rebuilding has reduced some of the concerns observed during the previous crop, the persistent gap relative to the historical average indicates that there is still no supply surplus capable of exerting structural downward pressure on prices. Should exports remain strong or the production mix shift further toward ethanol at the expense of sugar, the market could tighten again as the crop progresses, increasing the likelihood of higher prices.
