Group 1 - Sugar prices settled lower, with NY sugar reaching a 2.5-week low and London sugar hitting a four-year nearest-futures low [2][3] - Weakness in crude oil prices and the Brazilian Real are contributing factors to the decline in sugar prices, with WTI crude dropping over 4% to a 5-month low [2] - Brazil's sugar output is projected to increase, with a reported 15.7% year-on-year rise in sugar production in the first half of September [4] Group 2 - A global sugar surplus of 4.1 million metric tons is anticipated for the 2025/26 season, negatively impacting sugar prices [3] - India's monsoon rains are expected to lead to a bumper sugar crop, with a projected 19% year-on-year increase in sugar production for 2025/26 [5] - The cumulative monsoon rain in India as of September 30 was reported at 937.2 mm, 8% above normal, marking the strongest monsoon in five years [5]

Sugar Market Overview - Sugar prices are declining, with NY sugar reaching a 2.5-week low and London ICE white sugar also falling [2][1] - The decline in sugar prices is influenced by a drop in crude oil prices and a weaker Brazilian Real, which encourages Brazilian sugar exports [2][4] Supply Dynamics - Brazil's sugar output has increased, with a reported 15.7% year-on-year rise in the first half of September, leading to higher sugar production [4][5] - The percentage of sugarcane crushed for sugar in Brazil has also risen, indicating a shift towards sugar production over ethanol [4] - A projected global sugar surplus of 4.1 million metric tons for the 2025/26 season adds to the bearish sentiment in the market [3] India’s Production Outlook - India's sugar production is expected to rebound significantly, with a projected 19% year-on-year increase to 34.9 million metric tons for the 2025/26 season due to favorable monsoon conditions [5] - The cumulative monsoon rainfall in India has been reported at 937.2 mm, 8% above normal, contributing to expectations of a bumper sugar crop [5]

Core Viewpoint - The yen carry trade is expected to make a comeback due to the anticipated slower interest-rate hikes under Sanae Takaichi's leadership, which could attract traders back to borrowing the low-yielding yen to invest in higher-yielding currencies [1][2][4]. Currency Market Reaction - Japan's currency has depreciated approximately 2% against G-10 currencies this week, driven by expectations of Takaichi's pro-stimulus policies leading to a delayed timeline for the Bank of Japan's (BOJ) policy tightening [2][4]. - The yen is nearing a six-month low against the dollar, with market concerns about increased government spending and inflation under Takaichi's potential administration [4][6]. Interest Rate Expectations - Market participants have reduced their expectations for immediate policy tightening, with swaps indicating a 22% chance of a BOJ rate hike at the upcoming meeting, down from about 57% prior to the leadership vote [6]. - Etsuro Honda, an advisor to Takaichi, suggested that a rate increase this month would be premature, advocating for a more suitable timing in December [5]. Carry Trade Dynamics - Analysts believe that if Takaichi maintains her stance that a weak yen is not detrimental to Japan's economy and opposes rate hikes, the carry trade could resume, leading to further yen depreciation [8]. - Masayuki Nakajima from Mizuho Bank predicts that yen selling may accelerate, potentially pushing the currency towards 180 per euro [7].