Sugar is one of the most basic commodities. Countries throughout the world are wanting sugar. Supplies of sugar are reaching a 20 year low this year. The shortage may become especially acute in the third quarter.

Here some supply/demand statistics:

• India the biggest importer may need an extra 2.5 to 3 million tons to meet a 7 million ton deficit.
• China, the biggest consumer after India may have a deficit of 3.3 million tons.

It sometimes is a small, unpredicted event that moves markets. Today it was Jean-Claude Trichet, the president of the European Central Bank. He unexpectedly left a meeting in Australia to attend special meeting of European leaders to address the region's economy.

That was the trigger that shot off a turnaround in world markets. Stocks and commodities are trading higher in anticipation that the Greek sovereign debt problem will be dealt with. The U.S. market, just opened, did it with a bang as the Dow industrials more than recovered its triple digit loss from Monday to be back above the 10,000 mark.

Several factors converging on the metals markets are causing a sell off.

First, China has taken steps to curb bank lending. Much of the Chinese stimulus money has gone into the purchase of raw materials. Now, with things cooling down, traders are less willing to stockpile base metals.

Second, U.S. payrolls fell by 20,000 last month, indicating sluggishness in the U.S. economy.

This morning the big news of the day was the drubbing of European stock markets as fear spread throughout the region. Fear was generated by concern that some European countries could default on their sovereign debt. Among them are Greece, Spain, and Portugal.

Greece's budget gap is 12.7% of GDP Greece has to slash spending and may need IMF assistance.

Investors sold investment deemed risky such as commodities, gold and stocks and moved their money into bonds. This started a selling frenzy in commodities with oil falling $3.14 per barrel to $73.14 per barrel. Brent crude fell $3.79 per barrel to $72.13 per barrel.

There were several reason cited for the drop. Among them were concerns about euro zone debt and weaker than expected US jobless figures.

Gold selling intensified and spread to other commodities on worries of sovereign debt default in Greece, Spain and Portugal.

Where should you invest in 2010?" asks resources sector expert Curtis Hesler, who suggests, "Preferably, you should stick to the heart of the matter and focus on crude oil and gold.".

In his top-ranked The Professional Timing Service, he explains, "Invest in assets that promise to increase in price as the dollar falls; this will insulate your portfolio from the damage that the ongoing deleveraging process will bring to the stock market and to other paper assets."

"Despite the expected correction, there is much further to go for gold and gold stocks." says Adrian Day. In The Global Analyst, he looks to the outlook for gold and some mining favorites.

"Gold saw its ninth annual advance, to new highs before a 10% correction at the end of the year. Gold certainly was helped by the weak dollar-and the year-end sell-off was provoke by a dollar recovery-but it's much more than an anti-dollar play.

First, China has a $300 billion dollar sovereign wealth fund called the China Investment Corp. The fund has been investing natural resources which China needs to develop its economy. For example, China has had talks with Brazil, the world's second biggest iron ore exporter and Mexico, the second largest silver producer.

For those of you who use technical analysis, BusinesWeek brings an interesting one of the gold market by Aaron Smith of Superfund Finance Singapore.

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index. Moving averages can signal directional trends for a security. Anyone who relies on technical analysis must use some kind of qualifier such as this statement to let the investor know that he/she is not using a fundamental approach such as P/E, sales, net profit, etc.

Is the world running on stimulus money or is there real demand for basic commodities?

What has been happening is that underdeveloped countries have been using stimulus money to stockpile raw commodities. Now there is a surplus. This, in turn, has led to a fall-off in commodity prices.

"WisdomTree International Utilities (DBU) is an excellent way to diversify outside of the U.S. in a defensive portfolio of quality stocks," says Carla Pasternak .

In High Yield International, she explains, "This ETF tracks the WisdomTree International Utilities Sector Index of international dividend-paying utilities outside of the United States and Canada. To be included in the index, companies must have paid at least $5 million in cash dividends on their common stock in the prior year. Positions are weighted based on the amount of regular cash dividends paid.

Nineteen analysts from Bloomberg News forecast a rise in the Mexican peso, one of the cheapest currencies in emerging markets.

Let's look at some reasons why the peso is undervalued:

• Mexico's economy is closely tied to the U.S. With the U.S. economy on the rebound, analysts believe that Mexico's economy will follow suit.
• Mexico's economy shrank 6.2% in the third quarter, while the U.S. economy grew by 2.2%. Growth in the U.S. economy will filter down to Mexico.

It's been stated before, but it's worth repeating that two enduring trends of the high-oil-price era will be localization and increased density.

Essentially, in the decade ahead the U.S. economy (but not only the U.S.) will adjust by shrinking the distance between just about everything. Spatial geography will adjust to the reality of higher transportation costs per mile.