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Raízen Locks 60% of Future Sugar with Hedge and Responds to Price Decline After Reporting Billion-Dollar Loss in the Quarter.
Raízen has decided to pre-fix sugar prices for the 2026/27 Harvest to protect its revenues amid the drop in Sugar Price in the international market.
The strategy was revealed during the third-quarter earnings call for the 2025/26 cycle, when the company also confirmed a Billion-Dollar Loss of R$ 15.6 billion.
The move takes place in Brazil, the company’s main sugar-energy hub, and involves the early sale of 60% of the sugar intended for export.
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The objective, according to the company, is to reduce financial risks and stabilize cash flow in a scenario of squeezed margins.
Raízen Accelerates Sugar Hedge Above Market
Raízen has adopted a more aggressive stance than the average mills by advancing its Sugar Hedge for the upcoming season.
By the end of the third quarter, the company had already locked contracts at an average price equivalent to US$ 1.11 per pound.
This price, as explained by investor relations director Philippe Casale, is “above current market levels” and close to what was recorded in the 2025/26 harvest.
In this way, the company seeks to ensure revenue predictability even amid commodity volatility.
In practice, the hedge serves as a price insurance.
That is, the company pre-fixes the selling price to avoid losses if the market declines in the future.
Strategy Aims to Compensate for Sugar Price Decline
The decision comes after the drop in Sugar Price directly affected the performance of the sugar and ethanol segment.
Between April and December of the current harvest, the average selling price was R$ 2,389 per ton, about 7% below the same period of the previous cycle.
As a result, operating margins shrank.
The adjusted EBITDA of the business fell 28.1% over nine months, decreasing to R$ 3.9 billion — a reduction of approximately R$ 1.5 billion.
According to Casale, the advancement in the hedge should “mitigate the effect of the recent fall in [sugar] prices.”
Therefore, the strategy aims to soften the negative impacts on the company’s cash flow.
Billion-Dollar Loss Marks Raízen’s Quarter
Despite price protection for the upcoming harvest, the third-quarter balance recorded a Billion-Dollar Loss of R$ 15.6 billion between October and December 2025.
The result was announced on Thursday night, the 12th.
The bulk of the loss came from an accounting write-down (impairment) of R$ 11.1 billion.
This adjustment occurred following a reassessment of assets due to the decline in the capital structure and the rise in financial costs.
The other R$ 4.5 billion reflects weaker operational performance in the sugar and ethanol segment.
This effect ended up overshadowing improvements in cash generation in the fuel distribution area.
2026/27 Harvest Gains Strategic Role
Given the current scenario, the 2026/27 Harvest is seen as crucial for recovering results.
By locking prices early, Raízen seeks to ensure minimal profitability even in a pressured commodities environment.
Additionally, the strategy reduces exposure to fluctuations in the international market, which has been affected by high supply and changes in global demand.
On the other hand, the move limits gains if sugar prices rise again.
Still, the company chose to prioritize predictability and cash protection.
Impacts on the Sugar-Energy Sector
The advancement in Sugar Hedge also signals a more conservative stance amid uncertainties in the sector.
While many mills still maintain open positions, Raízen preemptively fixed prices for most of the exported volume.
This difference in strategy may influence market behavior in the coming months.
After all, companies with greater protection tend to fare better during downturns.
Perspectives for Sugar Price
The Sugar Price remains the main risk variable for the segment.
The recent decline has reduced the contribution from the sugar and ethanol business, historically responsible for strong cash generation for the company.
In this context, the hedge for the upcoming harvest emerges as a tool for financial stability.
The expectation is that the measure will help balance results while the market seeks a new equilibrium point.
Raízen Bets on Protection to Recover Margins
In summary, the combination of Billion-Dollar Loss, falling Sugar Price, and margin pressure led Raízen to act proactively.
By advancing on the Sugar Hedge for the 2026/27 Harvest, the company seeks to reduce risks and rebuild its cash generation capacity.
The success of the strategy will depend on market behavior in the upcoming cycles.
Nevertheless, the decision indicates a shift in posture to face a more challenging scenario in the sugar-energy sector.
See more at: Raízen Advances in Fixing Prices for the Next Harvest to Mitigate Sugar Decline
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