Data from the Vietnam Commodity Exchange (MXV) shows that by the close of the last trading day (January 5) of the first week of the new year, selling pressure dominated the commodity market. Prices for 22 out of the 31 globally traded commodities simultaneously weakened, dragging the MXV-Index down by 0.42% to 2,118 points. The average trading value of the entire exchange reached over 4,300 billion VND/day, a 26% decrease from the previous week, reflecting domestic investors' cautious sentiment.

Oil Prices Surge at the Start of the New Year

According to MXV, by the end of the first trading week of 2024 (January 2-7), oil prices surged due to signs of supply disruptions. Additionally, escalating tensions in the Middle East and the Red Sea further boosted buying pressure in the market.

Specifically, WTI oil prices rose by 3.01% to 73.81 USD/barrel. Brent oil closed at 78.76 USD/barrel, a decrease of 2.23% from the previous week.

Protests in Libya forced oil operators to significantly reduce or even halt operations at the Sharara oil field, the largest oil field in Libya with a capacity of approximately 300,000 barrels/day.

Previously, geopolitical instability had hindered the development of Libya's oil sector. According to Argus data, Libya's oil exports averaged below 990,000 barrels/day in 2023, higher by 100,000 barrels/day compared to 2022 but lower by approximately 80,000 barrels/day from the peak post-civil war in 2021.

Meanwhile, tensions in the Red Sea area showed no signs of easing, contributing to the rise in oil prices. Giant shipping company Maersk announced last weekend that it would reroute all its ships away from the Red Sea in the near future, warning customers of potential shipping disruptions.

In another development, oil trade between China and Iran was stalled as Tehran refused to export and demanded higher prices, tightening the supply of cheap oil for the world's largest crude oil importer.

Bank of America, in a report, stated that oil prices will continue to be volatile in 2024 due to geopolitical risks and policies from the Organization of the Petroleum Exporting Countries and allies (OPEC+). The bank expects the Brent oil trading range to remain between 70 - 90 USD/barrel as OPEC+ intervenes from Q1 2024. A Reuters source stated that the group will hold a meeting on February 1. This information also boosted buying sentiment, as OPEC+ could further intervene in the market by adjusting quotas downwards.

Adding to the supportive factors, the US Department of Energy (DOE) announced that it would purchase up to 3 million barrels of oil to replenish the Strategic Petroleum Reserve (SPR) in April 2024. In 2023, the US added a total of about 11 million barrels to the SPR, with approximately 4 million barrels to be returned by oil companies in February 2024.

Soybean Prices Drop Sharply

The selling pressure continued to dominate the soybean market in the first trading week of 2024. Returning from the New Year holiday, soybean prices maintained a downward trend from the opening to subsequent sessions. The market's attention focused on South America as weather conditions in Brazil and Argentina showed positive signs. This caused soybean prices to drop for the 8th week in the last 9 weeks.

The Refinitiv Commodity Research Center reported that this week, heavy rain would continue in Northern, Central, and Eastern Brazil, while the South and Southeast would be dry. The temperature is expected to be favorable in the North, while heatwaves will occur in parts of the South and East. If these forecasts are accurate, the rain will significantly improve soil moisture in drought-affected areas, recovering crop yield losses.

In Argentina, the overall weather outlook is relatively positive. Recent widespread rains have also helped improve soil moisture across the Pampas plains, supporting crop growth. Soil moisture is currently at or above the highest levels in 6 years in most major production areas, except for some western provinces such as La Pampa and San Luis. This is the main reason why Refinitiv raised its forecast for Argentina's soybean production in the 2023/24 season to 49.2 million tons, an increase of 2% compared to the previous estimate.

On the demand side, the US Department of Agriculture (USDA) reported that US soybean sales for the 2023/24 season in the week ending December 28 were only 200,000 tons. This figure surprised analysts, who expected sales to range between 500,000 tons and 1.3 million tons. Low sales during the peak period indicate that US soybeans are less competitive in the market, putting pressure on prices.

Soybean meal prices weakened by more than 4% last week, making it the largest declining commodity in the agricultural group. With positive weather prospects, soybean production in Argentina is expected to recover strongly this year. This will enable plants to resume oil extraction activities after a period of raw material shortage.

In the domestic market, as recorded on January 5, the price of imported South American soybean meal at Vietnamese ports remained unchanged. Specifically, the offering price for South American soybean meal at Cai Lan port was 13,150 VND/kg. For Q2 delivery, soybean meal prices ranged from 13,050 - 13,150 VND/kg. At Vung Tau port, the offering price was recorded to be about 100 VND lower than at Cai Lan port.

Source: MXV