Data from the Vietnam Commodity Exchange (MXV) reveals that during the final trading week of March (March 25-29), buying pressure dominated in three of the four commodity groups traded globally at MXV: Industrial, Energy, and Agricultural products. This led the MXV-Index to rise by 1.08% to 2,237 points, extending its gain for the sixth consecutive day. The average trading value on the Exchange was nearly VND 5,700 billion per day, down 15% from the previous week.

Thus, by the end of Q1, the commodity index had increased by nearly 6% compared to the start of the year, indicating a rising trend in many important commodities. Cocoa continued to lead the market trend, closing with a 9.25% gain and setting a new historical peak. Coffee and sugar maintained strong upward momentum throughout March, ending the week with increases of 2-3%. Oil prices also reached their highest levels in five months following a strong week of gains.

Cocoa Prices Surge 128% in Q1; Coffee Prices Continue to Rise

At the end of the week, cocoa prices reached a new historical peak at $9,766 per ton, following a 9.25% increase. Compared to the beginning of the year, cocoa prices have surged by 128%. MXV reports that severe supply shortages in major producing countries remain a key factor driving strong demand for cocoa.

According to the Ivorian government, cocoa shipments to ports in the country have dropped by 28% compared to the same period last year, reaching 1.28 million tons as of March 24. Additionally, Côte d'Ivoire's cocoa production for the 2023/24 season is estimated to decline by 21.5%, down to 1.75 million tons.

Furthermore, Commerzbank notes that some cocoa-growing regions in Africa are being impacted by illegal gold mining, exacerbating concerns about supply shortages in the market.

In a notable development, coffee prices for Robusta and Arabica increased by 3.60% and 2.16%, respectively. The continued supply shortage in Vietnam remains a major driver for Robusta prices.

The Vietnam Coffee Association (Vicofa) reports that coffee exports for the 2023/24 season are expected to decrease by 20% compared to the previous season, falling to 1.336 million tons. The primary reason for the decline is drought conditions affecting the world's leading Robusta exporter.

For Arabica, the price increase is supported by low coffee stocks in major consumption markets. As of March 28, the total certified Arabica on ICE - US stood at 595,209 bags, down 20.41% from the same period last year. Despite continuous improvements over the past two months, this figure remains historically low.

Additionally, according to the European Coffee Federation (ECF), the total amount of coffee stored at ports as of the end of February 2024 reached 401,77 tons, the lowest level since August 2019.

Domestically, on the last weekend of March (March 30), coffee prices in the Central Highlands and southern provinces slightly recovered after a significant decline the previous day. Domestic coffee prices ranged between VND 98,100 and 98,600 per kg, marking an unprecedented high in Vietnam's coffee market. MXV predicts that there is still room for domestic coffee prices to reach a new peak of VND 100,000 per kg until new Robusta supplies from Indonesia and Brazil hit the market.

Crude Oil Prices Up 16% in Q1

At the end of the week, WTI oil prices rose 3.15% to $83.17 per barrel, while Brent oil increased 2.56% to $87 per barrel. After three consecutive months of price increases, crude oil prices have reached their highest level in five months. Furthermore, crude oil prices saw a 16% increase in Q1. According to MXV, this is the latest sign that production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+) are restraining global supply.

The OPEC+ alliance has extended its supply cut of about 2 million barrels per day until the end of June, reinforcing expectations that global reserves will shrink. Additionally, prices have been supported by geopolitical tensions and global demand growth over the past week.

In March, at least seven Russian refineries were attacked by Ukrainian drones, affecting approximately 12% of Russia's total oil refining capacity. This has made crude oil supply more competitive, leading to strong buying pressure in the market.

In the US, amid tight supply, gasoline prices are expected to rise to their highest level since the summer of 2022, reaching $4 per gallon, according to the American Automobile Association (AAA).

On the other hand, US economic growth continues to show positive signals, reducing the risk of recession and supporting future oil consumption prospects. Specifically, after two revisions, official data from the US Bureau of Economic Analysis showed that GDP growth for Q4 2023 was 3.4% compared to the previous quarter, higher than the figures reported in two preliminary reports.

Meanwhile, US crude oil production has also been declining, creating a supply gap in the market. According to the US Energy Information Administration (EIA), US crude oil production fell to 12.5 million barrels per day in January, a 6% decrease from the record high in December due to weather-related disruptions in production.

MXV reports that this week, the market's focus will shift to the OPEC+ online meeting scheduled for the evening of April 3 (Vietnam time), where the group will reassess its production policy and discuss future plans.

Source: MXV