According to the Mercantile Exchange Of VietNam (MXV), selling pressure returned and dominated the global raw materials market on the previous day (May 29), causing the MXV-Index to weaken by 0.53% to 2,378 points, ending a 3-day winning streak. The decline was primarily driven by losses in the energy and agricultural sectors.

Wheat prices recorded their largest decline of the week

With the exception of soybean oil, all other six agricultural commodities faced pressure on the previous day (May 29). Wheat prices fell by over 1%, marking the largest drop in more than a week.

According to MXV, in addition to technical selling, a more favorable crop outlook in the U.S. is the main factor pressuring prices. Specifically, according to the USDA's Crop Progress report, the percentage of winter wheat rated as good to excellent as of May 26 is 48%, significantly higher than the 34% at the same time last year. Meanwhile, the proportion rated poor has decreased from 35% to 19%.

In China, Refinitiv has raised its estimate for the country’s winter wheat production to 139.9 million tons. Forecasts for the next two weeks suggest that major growing regions will remain in a warm and dry weather pattern, which is favorable for harvesting activities. If this estimate is confirmed, China’s wheat production is expected to reach a historical high due to expanded planting areas and favorable weather. Increased domestic production will somewhat reduce the country’s reliance on foreign supplies, easing its position as the world’s largest wheat importer.

In the domestic market, as of the morning of May 29, the price of EU and South American wheat imported to Cai Lan port for May delivery ranged between 7,000 and 7,100 VND/kg, while June delivery was priced at 7,150 to 7,200 VND/kg. For July and August delivery, the offered price was higher at 7,500 VND/kg.

Weak consumption pulls down oil prices

On May 29, global oil prices weakened again as signs of consumption still did not show a surge, while supply remained relatively secure. WTI crude oil closed down 0.75% at 79.23 USD per barrel. Brent crude oil fell 0.74% to 83.60 USD per barrel.

Concerns about U.S. gasoline demand have kept gasoline futures near their lowest levels in two months, while refining margins have also dropped to their lowest since February, despite the approach of the high consumption season.

Meanwhile, despite concerns that the Organization of the Petroleum Exporting Countries and its allies (OPEC+) might extend voluntary production cuts into the third quarter in their meeting on June 2, the reality shows that some member countries are less compliant with the agreement.

Iraq’s Oil Ministry reported that the country exported about 102.38 million barrels of crude oil in April, a slight decrease of over 3 million barrels compared to March, despite its pledge to compensate for the non-compliance with quotas in the early months of the year by cutting supply significantly. This has put pressure on oil prices.

Data from the Fujairah Oil Industry Zone and ship tracking shows that total inventories increased by 4.4% to 20.363 million barrels in the week ending May 27 after dropping to a two-month low, reflecting a slowdown in demand. Stocks of heavy distillates also rose by 9.5% to 10.116 million barrels in the most recent week, the highest in the past five weeks.

In another development, natural gas prices fell by over 3% to their lowest level in a week and a half due to forecasts of cooler weather in the U.S., which are expected to reduce natural gas demand from power providers. Maxar Technologies reported on Wednesday that weather forecasts indicate cooler conditions for much of the northeastern to central U.S. from June 8 to June 12. Additionally, the consensus forecast that U.S. natural gas inventories would increase by +74 billion cubic feet in the previous week also put pressure on prices during the session.

Source: MXV