Data from the Mercantile Exchange Of VietNam (MXV) shows that by the end of the last trading week of March (March 25-29), buying momentum dominated three out of the four commodity groups traded globally on MXV, including Industrial, Energy, and Agricultural products. This support pushed the MXV-Index up by 1.08% to 2,237 points. The average daily trading value across the exchange reached nearly 5.7 trillion VND, 15% lower than the previous week.

By the end of Q1 this year, the commodity index had increased by nearly 6% compared to the beginning of the year, indicating a rising trend in many important commodities. Cocoa continued to lead the market trend with a 9.25% increase, setting a new historical peak. Coffee and sugar prices maintained strong upward momentum throughout March, closing the week with increases of 2-3%. Oil prices also reached a five-month high after a strong rise last week.

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

By the end of last week, cocoa prices hit a new historical peak at 9,766 USD/ton, after a 9.25% increase. Compared to the beginning of the year, cocoa prices have surged by 128%. MXV attributed the strong buying momentum in cocoa to a severe supply shortage in major producing countries.

According to the Government of Ivory Coast, the amount of cocoa delivered to ports by March 24 had decreased by 28% compared to the same period last season, reaching 1.28 million tons. Additionally, the cocoa production for the 23/24 season in Ivory Coast is estimated to decline by 21.5%, down to 1.75 million tons.

Commerzbank reported that some cocoa-growing regions in Africa are affected by illegal gold mining, exacerbating concerns about supply shortages in the market.

In another notable development, prices for both types of coffee rose, with Robusta prices up by 3.60% and Arabica prices up by 2.16%. The tight supply situation in Vietnam continues to be the main driver of Robusta prices.

The Vietnam Coffee Association (Vicofa) reported that the country’s coffee exports for the 23/24 season are estimated to decrease by 20% compared to the previous season, down to 1.336 million tons. Drought is the main cause of the production decline in the world's leading Robusta exporter.

For Arabica, besides the upward pull from Robusta prices, low coffee stock levels in major consumption markets supported the price increase. As of March 28, the total certified Arabica stock on the ICE-US exchange reached 595,209 bags, down 20.41% compared to the same period last year. Although it has been steadily supported over the past two months, this figure remains historically low in the long term.

Additionally, according to the European Coffee Federation (ECF), the total amount of coffee stored at ports by the end of February 2024 hit 401.77 tons, the lowest since August 2019.

On the domestic market, as of March 30, the price of raw coffee beans in the Central Highlands and Southern provinces slightly recovered after a sharp decline the previous day. Domestic coffee purchase prices ranged from 98,100 to 98,600 VND/kg, unprecedentedly high in Vietnam's coffee market history. MXV predicts there is still room for domestic coffee prices to reach a new peak of 100,000 VND/kg until the new Robusta supply from Indonesia and Brazil hits the market.

Crude Oil Prices Increase by 16% in Q1

At the end of the week, WTI crude oil prices rose by 3.15% to 83.17 USD/barrel. Brent crude oil increased by 2.56% to 87 USD/barrel. After three consecutive months of price increases, crude oil prices are now at a five-month high. This commodity also saw a 16% price increase in Q1. According to MXV, this is the latest indication that the production restrictions by the Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+) are curbing global supply.

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

In March, at least seven Russian refineries were attacked by drones from Ukraine, affecting about 12% of Russia's total oil processing capacity. This has made crude oil supplies more competitive, leading to strong buying momentum in the market.

In the U.S., amid tight supply, gasoline prices are forecasted to reach the highest levels since the summer of 2022, up to 4 USD/gallon, according to the American Automobile Association (AAA).

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

Meanwhile, U.S. crude oil production is also trending downward, leaving a supply gap in the market. According to the U.S. Energy Information Administration (EIA), U.S. crude oil production fell in January to 12.5 million barrels per day, down 6% from the record high in December due to icy weather disrupting extraction activities.

MXV noted that this week, the market's focus will be on the virtual meeting of OPEC+ ministers scheduled for the afternoon of April 3, Vietnam time, to review the group's production policy and discuss future plans.

Source: MXV