Data from the Mercantile Exchange Of VietNam (MXV) shows that the world raw material market closed last week with very strong fluctuations. However, the contrast in many important items caused the MXV-Index to change insignificantly, closing the week up less than 0.1% to 2,345 points.

Prices of industrial raw materials increased sharply

Notably, the MXV-Index of the Industrial Raw Materials group recorded a series of increases for 6 consecutive days, showing a stable upward trend of prices of many important products in the group. Closing the week, except for palm oil, the remaining 8 products all increased sharply. Cocoa prices skyrocketed 12.87%, leading the market increase in the context of concerns about global supply that show no signs of cooling down. Cotton, sugar, rubber, and coffee also received positive buying pressure. 

Cotton prices ended the week up more than 6% from the lowest level in more than a year. US cotton sales in the 2023-2024 crop increased again, reflecting a recovery in cotton demand. In the weekly cotton export report ending May 16, the US sold 202,900 bales of cotton, up 30% and 19% respectively compared to the previous week and the latest 4-week average.

Furthermore, the market is gradually seeing an increase in demand for cotton in China, the world's largest cotton consumption and import market.

The coffee market quickly regained momentum with Robusta increasing by 10.6%, Arabica increasing by 5.6%. Poor supply in main producing countries is causing concerns about coffee shortages in the market, thereby supporting prices to increase again. In the second 2024 crop survey results report, the Brazilian government's Crop Supply Agency CONAB raised Robusta coffee production forecast to 58.8 million bags, a slight increase from the previous 58.1 million bags. there.  

However, CONAB lowered the country's Robusta coffee production forecast by 600,000 bags, down to 16.7 million bags in the latest report.  

In addition, information from Brazilian farmers said that their Arabica coffee harvest is going quite slowly and the small fruit size may affect this year's output.

Along with that, StoneX estimates that Vietnam's coffee output may only reach 24 million bags, which is the lowest level in the past 4 years. Analysts say climate change causes supply to decrease in Vietnam.  

On the domestic market, recorded at the end of last week (May 25), the price of green coffee in the Central Highlands and Southern provinces increased by 1,500 VND/kg, bringing the domestic coffee purchasing price to 114,500 - 116,000 VND/kg. Compared to a week earlier, domestic coffee prices have increased sharply by about 12,000 VND/kg.

Wheat prices jumped

Wheat prices led the increase in the agricultural product group, jumping more than 7%, reaching the highest mark since mid-August 2023. Concerns about less positive crop prospects in major producing countries were still a factor that helped support prices last week.

According to the Russian Ministry of Agriculture, it is estimated that up to now, about 900,000 hectares of grain area in this leading exporting country have been damaged by frost in early May. Previously, 8 main production areas also issued an emergency warning of widespread frost, raising concerns about tighter supplies.  

Supply risks in the Black Sea region have caused the International Grains Council (IGC) to cut its forecast for world wheat production in the 2024-2025 crop year to 795 million tons. Accordingly, wheat production in Russia and Ukraine is expected to decrease to 85.5 and 23.7 million tons, from 90.4 and 24.5 million tons previously given. Concerns about supply have pushed wheat prices back to trend and recorded the 5th weekly increase in the past 6 weeks.

MXV said that this week is forecast to be a very exciting week for the agricultural market. Most exchanges in the US will be closed for a holiday today (May 27), and when they reopen tomorrow, agricultural products will likely receive strong buying pressure, due to the slow harvest. Delays in Brazil could affect supply during the mid-year period, a period when import demand from East Asian and Southeast Asian countries is often very large. 

This is something animal feed factories need to pay special attention to, because purchasing goods from South America or the US will not only depend on price, but also on the time the goods arrive to serve domestic production needs.

Source: MXV