The Mercantile Exchange of Vietnam (MXV) reported that selling pressure continued to dominate yesterday's trading session (September 4). At the close, the MXV-Index dropped by another 0.45%, landing at 2,090 points. The energy market remained in the red, with both crude oil products weakening for the third consecutive session. Most industrial raw materials saw price declines, except for two coffee products. The gap between Robusta and Arabica coffee is narrowing due to the consistent recovery and price increases in Robusta coffee.

Robusta Coffee Prices Increased by $200/ton

At the close of trading on September 4, while all other industrial raw materials saw price drops, coffee bucked the trend. Robusta coffee prices surged by 4.3% ($200/ton), approaching the critical $5,000/ton mark, while Arabica coffee prices inched up by 0.4% compared to the reference. Weather conditions in Brazil continue to capture the market's attention as the country's main coffee-growing regions are facing the worst drought since 1981.

The Southeast Brazil region, the largest coffee-producing area in the country, is experiencing a record-breaking drought that has lasted over three months. This has reduced the effectiveness of flowering and the development of coffee cherries for the 2025 harvest. Some growers have reported that large areas of coffee plants could not withstand the months-long lack of rain and may be lost entirely. Stable production is unlikely to resume until 2025.

Moreover, weather forecasts suggest that the lack of rain in Southeast Brazil’s coffee plantations may extend into September. This has raised concerns about the 2025-2026 supply outlook, especially as this is a "down" year in Brazil's biennial coffee production cycle.

Currently, there are no specific statistics on losses due to the drought in coffee farms, but analysts expect production to decrease by 20%.

Robusta coffee prices performed better in yesterday’s session due to supply concerns not only in Brazil but also in Vietnam, the world’s largest producer of this coffee variety. The peak heatwave has also affected Vietnam’s Central Highlands coffee region for more than two months earlier this year, with production expected to drop by 15-20% compared to the previous harvest. Furthermore, domestic supplies are already depleted, exacerbating global supply concerns and supporting the price increase.

On the domestic market, as of this morning (September 5), the price of raw coffee beans in the Central Highlands and southern provinces ranged from 118,200 to 119,300 VND/kg, an increase of 800 VND/kg compared to yesterday.

Oil Prices Fall to the Lowest Level in 2024

According to MXV, at the close of yesterday’s trading, both WTI and Brent crude oil experienced declines for the third consecutive session, hitting the lowest levels of the year under pressure from macroeconomic factors and demand concerns. Brent crude oil prices dropped by 1.42%, falling to $72.7 per barrel. WTI crude oil prices fell by 1.62%, to $69.2 per barrel.

First, the market is cautious about the production policy of the Organization of the Petroleum Exporting Countries (OPEC+), as the group's plan to gradually restore supply in October remains uncertain. The likelihood of this scenario is decreasing as issues in Libya are being resolved, and the group’s supply is expected to stabilize.

Libyan lawmakers have agreed to appoint a new central bank governor within 30 days following UN-backed negotiations. This could restore the country’s production of about 700,000 barrels per day, significantly increasing global supply.

On the macroeconomic front, according to the U.S. Department of Labor's Job Openings and Labor Turnover Survey (JOLTS), new job openings fell to 7.67 million at the end of July, lower than the forecasted 8.09 million, marking the lowest level since January 2021. The survey also revealed that layoffs increased to 1.76 million in July, the highest since March 2023.

The data reflects weakening conditions in the U.S. labor market, with both high layoff rates and low hiring demand, indicating the challenges facing the world’s largest economy. Weak data from both the U.S. and China has thus reinforced the global market's downward trend.

The persistent pressures on the market in recent times have also been flagged by Citi Bank. The bank lowered its forecast for the average global oil price to $60 per barrel next year due to declining demand and rising supply from non-OPEC countries.

Conversely, the market's decline was somewhat limited by the American Petroleum Institute (API)'s inventory report. Specifically, API data showed that U.S. crude oil inventories fell sharply by 7.4 million barrels last week, far exceeding analysts' forecast of a 0.9 million-barrel decline.

Source: MXV