According to the Mercantile Exchange of Vietnam (MXV), the buying force dominated the global commodity market during yesterday's trading session (October 2), pushing the MXV-Index up slightly by 0.4% to 2,232 points. Notably, the metals market was in the green as all items simultaneously increased in price. Meanwhile, in the coffee market, both Arabica and Robusta surprised the market with a sharp decline.

Improved supply drives coffee prices to plummet

According to MXV, prices of both coffee items fell sharply during yesterday's trading session. Specifically, Arabica coffee prices dropped nearly 3% from the reference point to 5,654 USD/ton, the lowest in two weeks; Robusta coffee prices fell more than 6%, nearing 5,100 USD/ton. A series of fundamental information favoring the harvest and coffee supply exerted pressure on prices.

The weather forecasting agency LESG reported that the drought in the Southeast – Brazil’s main coffee-growing region – is expected to end by the end of this week. From next week, cold air from the south will gradually move into the Southeast, bringing rain and lowering average temperatures. Over the next 15 days, rainfall in the Southeast could exceed the normal level by 50mm, and temperatures may drop by 2-4°C. Improved weather conditions have led to expectations that Brazil’s coffee harvest could recover after a record-breaking drought.

Additionally, the European Commission is proposing a 12-month delay in implementing new import regulations. Previously, the EU issued the Anti-Deforestation Regulation (EUDR), which prohibits the import of seven product groups, including coffee, palm oil, wood, rubber, beef, cocoa, and soybeans, if their production causes deforestation. This move could help stabilize coffee trade in the near future as some coffee producers are still adjusting to meet these regulations. Furthermore, the delayed implementation of EUDR might encourage European coffee importers to temporarily halt the massive importation of coffee (to ensure sufficient supply before the new regulations take effect), thereby helping the coffee market return to a supply-demand balance.

Positive production and export outlooks from several top coffee-producing countries also increased pressure on coffee prices in yesterday's session. Honduras, the largest coffee-growing nation in Central America, expects to export around 5.37 million bags, an increase of 14.5% from the previous harvest, thanks to higher production this year. Previously, the Indonesian government announced that the country's coffee exports in August exceeded 19,000 tons, up 18% year-over-year. Colombia, the world's largest exporter of high-quality Arabica coffee, also estimated that production for the 2024-2025 harvest could reach around 13 million bags, with total exports reaching around 12 million bags, an increase of 14.3% compared to the previous season.

Metals market in the green thanks to macroeconomic and supply-demand support

In contrast to the coffee market, the metals market continued to show strong performance. Among precious metals, silver and platinum prices increased for the second consecutive session, with gains of 0.56% and 1.58%, respectively, closing at 31.92 USD/ounce and 1,016.8 USD/ounce. These metals continued to benefit yesterday as escalating tensions in the Middle East drove investors to seek safe-haven investments.

Specifically, Iran's missile attack on Israel on Tuesday escalated tensions in the Middle East. Israeli President Benjamin Netanyahu subsequently announced retaliation against Iran. If tensions continue to escalate, a full-scale war could occur, threatening regional security.

For base metals, price fluctuations were relatively narrow due to low market liquidity as China entered its National Day holiday. However, the metals maintained the previous session's gains. COMEX copper prices continued to rise, increasing by 1.31% to 10,249 USD/ton. In addition to support from China’s economic stimulus measures, the prospect of strong demand growth in the medium and long term has also boosted copper prices.

In a recent forecast, giant mining company BHP predicted that by 2050, the energy transition sector would account for 23% of global copper demand, up from the current 7%. The digital sector, including data centers, 5G, artificial intelligence, the Internet of Things, and blockchain, is expected to account for 6% of total copper demand, up from 1% today. Additionally, BHP predicts that global copper consumption will increase by an average of 1 million tons annually until 2035.

In other developments, LME nickel prices extended their gains for the fourth consecutive session, rising by 2.5% to 18,153 USD/ton, maintaining their highest level in over two months. Nickel prices have recently been supported mainly by improved market sentiment following China’s announcement of strong economic stimulus measures, combined with some concerns about supply. According to Reuters, China's top nickel producer, Tsingshan, has cut ferronickel production in Indonesia due to persistent ore shortages.

Source: MXV