March NY world sugar #11 (SBH26) today is up +0.08 (+0.56%), and May London ICE white sugar #5 (SWK26) is up +0.20 (+0.05%). Sugar prices are moving higher today, with NY sugar posting a 2.5-week high and London sugar posting a 1.5-week high.  Strength in the Brazilian real (^USDBRL) is bullish for sugar prices.  The real jumped to a 1.75-year high against the dollar today, discouraging export sales from Brazil's sugar producers. More News from Barchart Sugar prices also have positive carryover support ...

Core Insights - Emerging market currencies are performing well, particularly in Latin America, with the Brazilian real returning 4.5% in 2026 and the Mexican peso returning 4.3% [2][12] - Carry trades, which involve borrowing in lower-yielding currencies to invest in higher-yielding ones, are up 1.3% this year, building on last year's 18% rally [12] - High real interest rates in developing countries are supporting carry strategies, as many central banks maintain tight monetary policies despite slowing inflation [12] Latin American Currencies - The Brazilian real has seen a significant return of 4.5% in 2026, following a 23.5% return last year, with interest rates at 15% [2][12] - The Mexican peso's carry trade has also performed well, returning 4.3% this year, with Deutsche Bank maintaining a bullish outlook [2][12] - Citi strategists recommend buying the Brazilian real against the dollar and also favor the Turkish lira [3] Underperforming Currencies - The Indian rupee, which was the worst performer last year, is down about 2% in carry terms this year [4] - The Indonesian rupiah has also resulted in losses for investors [5] Market Conditions and Predictions - The record for carry strategies was in 2003 with a 25% return, but current conditions require the dollar to weaken further and emerging currency volatility to remain low [9][12] - BofA strategist Alex Cohen suggests that carry trades will continue to outperform if volatility remains suppressed, although geopolitical risks could pose challenges [10][11]

Core Insights - Emerging-market stocks, currencies, and precious metals are experiencing significant gains as tensions between the US and Europe negatively impact the dollar, leading to increased diversification flows globally [1] Group 1: Market Performance - The MSCI Emerging Markets Equity Index has risen for two consecutive days and is on track for its fifth straight week of gains, marking its longest winning streak since May, with a 7% increase this year compared to a 1% gain for the S&P 500 [2] - Latin American equities have led the gains, climbing 13% in 2026, while Asian tech shares have been pivotal in driving the EM rally [2][5] - South Africa's equity benchmark is poised for its third consecutive weekly rally, with gold trading just under $5,000 an ounce [3] Group 2: Investment Trends - Investors are investing in emerging-market funds at a record pace, contributing to the EM stocks gauge reaching a record high [4] - The benchmark for Emerging Europe, Middle East, and Africa has risen every day this week, aiming for its best month since 2020, while the MSCI EM Latin America Index closed at its highest since 2018 [5] Group 3: Currency and Commodity Movements - The Chinese central bank's decision to set the yuan's daily reference rate stronger than the 7-per-dollar level for the first time in over two years has boosted risk sentiment and signaled tolerance for the currency's rally [3] - Currencies such as the Brazilian real and the Colombian and Chilean pesos have appreciated by more than 3% this year [8] - The National Bank of Poland, the world's largest reported gold buyer, has approved plans to purchase an additional 150 tons of gold [8] Group 4: Diversification Strategies - There is a growing trend among investors to diversify away from US assets, described as a "quiet-quitting" of US bonds, as funds from Europe to India seek alternatives to Treasuries [6][7]

Core Viewpoint - Sugar prices have increased due to a rally in the Brazilian real, which has led to short covering in sugar futures, while higher production in Brazil and India, along with a projected global sugar surplus, are expected to exert downward pressure on prices. Group 1: Sugar Price Movements - March NY world sugar 11 closed up +0.22 (+1.49%) and March London ICE white sugar 5 closed up +4.80 (+1.14%) [1] - The rally in the Brazilian real to a 2.25-month high against the dollar has prompted short covering in sugar futures, discouraging export sales from Brazil's sugar producers [1] Group 2: Production and Supply Dynamics - Brazil's cumulative 2025-26 Center-South sugar output through December rose by +0.9% year-on-year to 40.222 million metric tons (MMT) [3] - The ratio of cane crushed for sugar in Brazil increased to 50.82% in 2025/26 from 48.16% in 2024/25 [3] - India's sugar output from October 1 to January 15 is up +22% year-on-year to 15.9 MMT, with the total production estimate for 2025/26 raised to 31 MMT, up +18.8% year-on-year [5] - The Indian government may permit additional sugar exports to alleviate a domestic supply glut, allowing mills to export 1.5 MMT of sugar in the 2025/26 season [6] Group 3: Global Sugar Surplus Outlook - Covrig Analytics raised its 2025/26 global sugar surplus estimate to 4.7 MMT from 4.1 MMT, but projects a decline to 1.4 MMT in 2026/27 due to weak prices discouraging production [4] - An excessively long position in London ICE white sugar futures could exacerbate any price decline, with funds boosting their net long positions to a record 48,203 [2]

Price Movements - March NY world sugar 11 is up +0.22 (+1.48%), reaching a 2-week high, while March London ICE white sugar 5 is up +4.30 (+1.01%), achieving a 1-week high [1] - The recent rally in sugar prices is attributed to the strengthening of the Brazilian real, which discourages export sales by Brazil's sugar producers [1] Production Increases - Indian sugar production from October to November increased by +43% year-on-year to 4.11 million metric tons (MMT), with 428 sugar mills crushing cane as of November 30, up from 376 a year ago [2] - Brazil's sugar production estimate for 2025/26 has been raised to 45 MMT from 44.5 MMT, with a reported +8.7% year-on-year increase in sugar output in the first half of November [3] Sugar Surplus Forecasts - The International Sugar Organization (ISO) forecasts a sugar surplus of 1.625 million metric tons for 2025-26, driven by increased production in India, Thailand, and Pakistan, contrasting with a previous deficit forecast [4] - Czarnikow has increased its global sugar surplus estimate for 2025/26 to 8.7 MMT, up +1.2 MMT from a previous estimate [4] India’s Production Impact - The India Sugar Mill Association (ISMA) has raised its 2025/26 sugar production estimate for India to 31 MMT, reflecting an increase of +18.8% year-on-year, while also reducing the estimate for sugar used for ethanol production [5]

Group 1 - Currencies from Brazil, South Africa, and Mexico outperformed other emerging-market currencies as trade concerns eased, with thin trading volumes due to the US bond market being closed for a holiday [1] - Investor appetite for riskier assets increased, with the Brazilian real and South African rand each climbing 1.3%, supported by higher commodity prices and indications of potential trade negotiations between the US and China [2][3] - The Chilean peso and Peruvian sol also performed well as copper prices rose, with China's imports of copper and iron ore reaching their highest levels this year in September [4] Group 2 - Despite a rebound in the Brazilian real after a nearly 3% selloff, it is expected to remain under pressure due to fiscal concerns related to government efforts to expand social benefits ahead of 2026 [5] - Currencies from Eastern Europe faced pressure, influenced by the common currency and political instability in France, while the Israeli shekel lagged due to expectations of a peace deal with Hamas [6]

Core Insights - The yen has weakened significantly, reaching 152.34 against the dollar and a record low against the euro, following Sanae Takaichi's unexpected victory as the new leader of Japan's ruling Liberal Democratic Party [2][4] - Market expectations for a Bank of Japan interest rate hike have diminished, with a 25% chance of a move at the BOJ's upcoming meeting, down from 57% prior to the leadership vote [5] Currency Performance - The yen's depreciation has sparked renewed interest in the carry trade strategy, where investors borrow low-yielding yen to invest in higher-yielding currencies [5] - Bank of America has revised its forecast for the yen to end the year at 155 per US dollar, up from a previous estimate of 153, citing increased political and fiscal risks [6] Market Reactions - Hedging costs against further yen depreciation have surged, with premiums for hedging now at their highest level in over three years [7] - Analysts from ING noted that the new government under Takaichi is expected to influence a stronger economy, leading to a steeper yield curve and an equity rally [5]