Data from the Vietnam Commodity Exchange (MXV) shows that as of the close of trading yesterday (January 8), red dominated the raw material commodity price board. Out of 31 traded commodities, 22 saw a decline, causing the MXV-Index to reverse and drop by 1.37% to 2,089 points. The trading value reached nearly VND 4,500 billion.

Oil Prices Plummet Due to Weak Demand Concerns

According to MXV, the beginning of the trading week on January 8 saw oil prices plummet due to concerns over weak demand. Additionally, selling pressure was spurred by reports that the Houthi rebels and shipping companies had reached some agreements on safe passage.

At the close of the session, WTI oil prices dropped by 4.1% to $70.77 per barrel, while Brent oil prices fell by 3.4% to $76.12 per barrel.

The oil market witnessed strong selling pressure right from the start of the session after Saudi Arabia, the world's leading oil exporter, significantly reduced the selling price of Arab Light crude for February 2024 to Asia. Amidst competition from rival suppliers and concerns over increased supply, state energy giant Saudi Aramco reduced the official selling price (OSP) of Arab Light crude for February 2024 to Asia by $2 per barrel to $1.5 per barrel over the Oman/Dubai benchmark, the lowest level since November 2021. This is the largest reduction in 13 months, but in line with market expectations, indicating that the physical market remains weak.

Adding to the pressure on oil prices, a Reuters survey showed that oil production by the Organization of the Petroleum Exporting Countries (OPEC) averaged 27.88 million barrels per day in December 2023, an increase of 70,000 barrels per day from the previous month, with the largest increases coming from Iraq and Angola. Weak demand, while supply shows signs of increasing, will raise the level of surplus in the market, weighing down on oil prices.

Notably, selling pressure increased sharply after ShippingWatch reported that some shipping companies had reached safe passage agreements with the Houthi rebels, alleviating concerns about supply disruptions in the Red Sea, one of the world's vital shipping routes. However, two major shipping companies, Maersk and Hapag-Lloyd, denied any such agreements.

Furthermore, data from the Intercontinental Exchange Inc (ICE) and the Commodity Futures Trading Commission (CFTC) showed that hedge funds added about 61,000 short positions in Brent and WTI crude futures and options in the week ending January 2. This is the largest short position opening since March 2023 and the second largest since 2017, indicating that speculators are betting on a sharp price decline in the near future.

Coffee Prices Continue to Diverge

At the close of yesterday's trading session, the two coffee commodities continued their divergent trends. Arabica prices fell by an additional 0.77% to the lowest level in a month. Conversely, Robusta prices surged by 3.22%, marking the third consecutive rebound session.

At the opening of the session, prices continued the decline from the previous weekend as the market continued to react to positive supply signals. The Brazilian government reported that the country had shipped 4.06 million 60kg bags of coffee beans (equivalent to 243,560 tons) in December. This is the highest monthly coffee export volume in the past three years, up 33.75% and 3.77% compared to the same period in 2022 and November 2023, respectively.

However, by mid-session in the evening, the Dollar Index dropped, leading to a decline in the USD/BRL exchange rate. The narrowing exchange rate differential caused Brazilian farmers to be reluctant to sell coffee due to receiving less foreign currency.

Meanwhile, the Robusta market is awaiting the December export data from Vietnam, with concerns that farmers may be holding back on sales.

In the domestic market, as recorded this morning (January 9), raw coffee prices in the Central Highlands and southern provinces also increased slightly by VND 100/kg. Accordingly, domestic coffee is currently being purchased at around VND 67,800 - 68,600/kg.

Sugar Prices Rise Nearly 3%

Sugar prices for contract 11 rose by nearly 3%, returning to the highest level in over a week. Observers believe that the strong increase in production in Central South Brazil has impacted recent price trends, but concerns about crops in Asia, particularly India and Thailand, still persist. Rainfall in Brazil's São Paulo state has been much lower than average, which could hinder ideal growth for the 2024 crop.

Cotton Prices Increase

March cotton contract prices also increased by 0.29% due to a weakening USD in the early week session. Specifically, the Dollar Index lost 0.2%, reducing the strength of the USD and making US cotton cheaper for holders of other currencies. Lower costs stimulated buying, which prevailed.

Palm Oil Prices Rise for the Third Consecutive Session

Crude palm oil prices rose by another 0.3%, marking the third consecutive increase. Anilkumar Bagani, head of research at Sunvin Group, stated that delays in shipments of soybean oil and sunflower oil amid tensions in the Red Sea also supported current palm oil prices.

Source: MXVMXV