Special Situations Global Equities (SSGE)

Little Hedge Against Very High Oil Prices

Brazil’s flex‑fuel market creates a rapid hedge against soaring oil prices by shifting sugarcane use from sugar to hydrous ethanol when gasoline becomes costly. Lower hedging by mills lets them reallocate cane within a single harvest, tightening Brazil’s sugar exports. Government‑mandated ethanol blends, such as a move from E27 to E30, amplify domestic ethanol demand. The combined effect can trigger sharp, nonlinear spikes in global sugar prices.