Ethanol prices at São Paulo mills have dropped to their lowest nominal values of the 2026/27 season, a trend fueled by record production that is overwhelming current retail demand, even as a major federal demand catalyst is set to take effect. The price weakness comes despite high liquidity in the market, with hydrous ethanol indicator prices in São Paulo dropping approximately 2.13% in a recent week, while anhydrous ethanol saw a 0.98% decline in the same period, according to data tracked by the Center for Advanced Studies in Applied Economics (Cepea) at Esalq-USP. The continued pressure suggests that the supply surge from the sugarcane harvest is outpacing current consumption and pricing power for the major sugar-energy groups, including São Martinho (SMTO3), Cosan (CSAN3), and its subsidiary Raízen (RAIZ4).