Core Insights - Sugar prices have shown a recovery from early losses, influenced by a weaker dollar and short covering in futures markets [2] - The global sugar supply outlook remains robust, with projected surpluses impacting price levels [2][4] Price Movements - March NY world sugar 11 increased by +0.25 (+1.60%), while December London ICE white sugar 5 rose by +3.30 (+0.74%) [1] - NY sugar reached a 3-week low earlier in the day, and London sugar hit a 4.25-year nearest-futures low [2] Supply Dynamics - BMI Group forecasts a global sugar surplus of 10.5 million metric tons (MMT) for 2025/26, while Covrig Analytics estimates a surplus of 4.1 MMT for 2025/25 [2] - Brazil's sugar output in the first half of September increased by +15.7% year-on-year to 3.622 million tons [3] - Cumulative sugar output in Brazil's Center-South region fell by -0.1% year-on-year to 30.388 MMT through mid-September [3] India’s Sugar Production Outlook - India's sugar production is projected to rise by +19% year-on-year to 34.9 MMT for 2025/26, following a significant decline in 2024/25 [4] - The Indian Meteorological Department reported cumulative monsoon rainfall of 937.2 mm, 8% above normal, indicating favorable conditions for sugar crop production [4] Export and Ethanol Production Factors - India may divert 4 MMT of sugar for ethanol production in 2025/26, which may not sufficiently alleviate the sugar surplus [5] - Indian sugar mills are expected to export up to 4 MMT of sugar, exceeding earlier expectations of 2 MMT [5]

Core Insights - Gold prices have reached a new record, positioning the metal for its largest annual gain in over 45 years [1] - Gold futures surged to approximately $3,750, while immediate delivery bullion traded above $3,700 per ounce [2] Year-to-Date Performance - Gold is up more than 40% year-to-date, marking its best performance since 1979, driven by expectations of a Federal Reserve easing cycle and recent interest rate cuts [3][9] - The dollar index has decreased roughly 10% year-to-date, contributing to gold's rise as it is priced in US currency [4] Market Dynamics - Inflows into physically backed exchange-traded funds (ETFs) have reached a three-year high, with central banks continuing to accumulate gold [4] - Central banks, particularly in emerging markets like Russia, China, and India, are buying gold in significant quantities to hedge against currency fluctuations [5] Fund Manager Sentiment - A recent Bank of America survey indicated that gold is now the second most crowded trade, following the 'Magnificent 7' stocks, yet 39% of fund managers reported minimal allocation to gold [6] - The average allocation among surveyed fund managers was only 2.3% [6] Analyst Perspectives - Goldman Sachs analysts noted that gold's breakout is driven by conviction buyers, including increased ETF holdings and renewed demand from central banks after a seasonal lull [7] - Goldman Sachs has set a price target of $4,000 per troy ounce for gold by mid-2026 [8]

Market Sensitivity to Tariffs - Emerging and frontier markets are sensitive to new tariff announcements, with Japan facing domestic pressure due to an upcoming election [1][2] - US is a crucial market for Asian countries, limiting their options in trade negotiations [3] - The US President hopes ongoing negotiations will be successful [4] Impact of a Weaker Dollar - A weaker dollar negatively impacts foreign investors with $17 trillion invested in US equities, particularly those denominated in Euro, Yen, Taiwanese dollar, or Singapore dollar [6] - From April 2011 to two years prior to the discussion, the US dollar index increased by 55%, but has since fallen by 20% [5] - The dollar's depreciation is causing losses for foreign investors, even if the S&P 500 is performing well [6] - Some money is flowing out of US equities from non-US investors and back into growth stocks, especially in Asia's tech sector [7] Potential Winners and Strategies - The US President aims to bring jobs back to America through tariffs [8] - Asian automakers have already moved some production to the US [9] - South Korean semiconductor producer SK Hynix might build a factory in the US, similar to TSMC [9] - The US is the largest exporter of services globally, requiring caution in trade actions to avoid affecting US companies selling services like software, finance, and intellectual property [10] - The current trade war is focused on goods, and the US President is navigating to prevent it from expanding into a services trade war [11]