Sugar Surges

Sugar prices rushed higher this week, fueled by concerns that Brazil's crop would fall short of expectations. Sugar is produced around the world, but almost half of the world's exports come from Brazil, making it the sweet spot of the market. This week, one of Brazil's largest trading companies projected that the crop may be smaller than expected, sending prices sharply higher.

Over the last year, prices have fallen more than 12 cents per pound, or 35 percent, as producers around the world increased production in an attempt to capture higher prices. Raw sugar traded internationally comes primarily from two plants, sugarcane and sugar beets. Sugarcane is produced in tropical regions, led by nations like Brazil, India and China, while sugar beets are typically grown in colder countries like France, Germany, the United States and Russia.

Sugar for delivery in May pushed above 26 cents per pound multiple times this week, the highest price since last October.

Grains Pull Back

Corn, soybean, and wheat futures were lower this week. The South American soybean harvest, now running full tilt, is showing little signs of problems. Rumors that China may lighten up on grain purchases weighed down prospects for stronger exports. Finally, summerlike weather across the central Midwest has increased the probability that early spring planting will result in increased yields in the fall.

With temperatures in the 70s and 80s for much of this week, many investors believe that markets do not appear to have priced in the possibility of an unexpected late-spring frost. Temperatures at or below 28 degrees are lethal to corn plants. Once the corn is planted, a "hard freeze" could wreak havoc on the market. By midday Friday, the grains had recovered from their lows, but were still trading down on the week, with May soybeans near $13.65 per bushel, May corn just under $6.50, and May wheat at $6.51.

Gold Drops

Gold prices continued to fall this week, reaching a ten-week low on Thursday at $1627.50 per ounce. The market was disheartened by news that India was going to raise import taxes on gold, making it more expensive and difficult for its citizens to buy gold. India is the world's largest gold consumer, and a drop in their buying could have a significant impact on the global demand. By midday Friday, gold for April delivery had bounced back, trading near $1660.