<div class="grid grid--33-66-col"><div class="col"><img loading="lazy" src="/getContentAsset/061c994a-a452-418f-bfa0-f2cf3cf5c577/cb87803a-320c-480f-ab75-7b9029eaaf79/Ahmad-Al-Sati-new.png?language=en" alt="Ahmad Al Sati - insights" title="Ahmad Al Sati - insights" style="width: 180px" class="fr-fic fr-dii"></div><span style="font-size: 12px"><div class="col"><strong>AHMAD AL-SATI</strong><br><br>PRESIDENT OF GEMCORP CAPITAL ADVISORS LLC, PORTFOLIO MANAGER<br><br>Ahmad Al-Sati is Portfolio Manager of the Gemcorp Commodities Alternative Products strategy (GCAP) and President of Gemcorp Capital Advisors LLC, based in New York. He is responsible for leading Gemcorp’s commodities-focused investment strategy and overseeing the firm’s US advisory platform.</div></span></div><hr><p>It is a truism, backed by plenty of stats and anecdotes, that immigrant communities lose their language first and their preferences for familial foods last. Many have a childhood dish (or a grandma’s meal) that they still hanker for. Food habits are sticky.<br><br>Sugar is illustrative. Conventional wisdom says GLP-1 is bad for sugar demand because it steers consumers away from sweetened products. The data does not yet support that conclusion. For example, in the US, 61% of consumers are trying to limit their sugar intake. Yet, the demand for cane and beet sugar in the US remains steady and resilient (even as high fructose syrup continues a 20-year decline). That is also true elsewhere, where demand for sugar continues to increase, driven by population growth and rising incomes.<br><br>Nevertheless, sugar prices have declined since 2023, driven by better crop yields, improved supply chains and increased short interest from speculators. Last week, expectations of increased supply had driven Sugar #11 futures contracts to a 5-month low. Then the real world intervened.</p><p>El Niño weather patterns are turning a projected surplus into a potential deficit. India, the largest global consumer, is now predicting below normal monsoon rains impacting it as the second largest producer of sugar. Thailand, the second largest exporter, is experiencing a drought that may lower exports by more than 30%. Brazil can be a net beneficiary of the changing weather (it helped cap prices before and balanced deficits from Asia), but excess rain makes harvests and crushing inefficient. In addition, higher oil prices mean Brazilian mills are producing more ethanol and less sugar. Finally, a 30% drop in fertilizer deliveries (with disruption around the Strait of Hormuz) has impacted farmers and increased costs all over. For example, European beet farmers are projected to produce 8% less sugar this season due to fertilizer availability and hot weather.<br><br>We have been here before. In 2021-22, a confluence of events such as supply chain bottlenecks, La Niña and war resulted in food shortages that drove food prices up (sugar peaked in 2023) and inflation higher (resulting in multiple interest rate hikes). Increases in the price of sugar alone is negligible on overall inflation, but the causes of its price hikes underlie prices for other food products. And just like it is for sugar, the taste for these foods is generational and the demand is inelastic.&nbsp;<br><br>Resilient demand meeting uneven supply increases volatility and the need for capital. Volatility means that directional bets (futures) become even more precarious. The need for capital means financing the movement of these goods to meet the relentless bid for food by eight billion people is increasingly necessary. After all, unlike a factory, the production of these foods cannot be onshored but must be moved from points of production to points of consumption. A global footprint and an ability to move capital judiciously and nimbly will thus be at a premium.</p><p style="margin-left: 0"><br></p><p style="margin-left: 0" data-pasted="true"><strong><span style="font-size: 12px">Important Information</span></strong></p><p class="p1" data-pasted="true"><span style="font-size: 12px">This content has been prepared solely for informational purposes by Gemcorp (as defined below), is confidential and may not be reproduced.</span></p><p class="p1"><span style="font-size: 12px">This content does not constitute an offer or solicitation of an offer with respect to the purchase or sale of any security and should not be relied upon when evaluating the merits of investing in any securities or form the basis of an investment decision. The information in this content has been obtained from various third-party sources, some of them forward-looking statements and/or projections. 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