According to the Mercantile Exchange Of VietNam (MXV), trading resumed after the holiday, closing yesterday (May 28), with green dominating the commodity price board. Strong buying of several key items supported the MXV-Index, which increased by 1.72% to 2,390 points, its highest level since early February 2023.

Coffee Prices Surge by 5%

All 9 industrial commodity categories saw significant increases of up to 1.3%. Notably, coffee prices surged by 5.8%. Arabica prices exceeded $5,091 per ton, the highest in the past 5 weeks, while Robusta prices reached a 1-month peak at $4,120 per ton.

MXV reported that shrinking supplies in major producing countries are causing concerns about a coffee shortage in the market, which supports the price increase.

In its latest report, Brazil's government agency CONAB lowered its forecast for Robusta coffee production by 600,000 bags to 16.7 million bags. Additionally, StoneX estimates that Vietnam's coffee production may only reach 24 million bags, the lowest in 4 years, primarily due to climate change.

On the domestic market, as of the morning of May 28, coffee bean prices in the Central Highlands and Southern provinces increased by 500 VND/kg, raising domestic purchase prices to 115,700 – 117,200 VND/kg.

Trends in Commodity Prices, Cotton prices also rose by 2%, reaching a one-month high. U.S. cotton sales for the 2023-2024 season increased, reflecting a recovery in demand, particularly from China. In the weekly cotton export report ending May 16, the U.S. sold 202,900 bales of cotton, up 30% and 19% compared to the previous week and the average of the last 4 weeks, respectively.

Cocoa prices increased nearly 4% due to low supply. From the start of the 2023-2024 season (October 2023) until May 26, 2024, cocoa shipments to ports in Côte d'Ivoire totaled only 1.469 million tons, down 29% from the same period last year. Additionally, drought in key cocoa-growing regions in Côte d'Ivoire may impact the development of cocoa pods expected to be harvested between April and September.

Silver prices rose by 5%, leading a strong increase in the metals group.

By the end of the trading day on May 28, the metal price board was overwhelmingly green, with 9 out of 10 items increasing. Precious metals saw significant gains, with silver and platinum prices rising by 5.37% and 2.72%, closing at $32.13 per ounce and $1,066.80 per ounce, respectively.

Despite warnings from Federal Reserve officials that rates might remain high for longer, market investors are optimistic. The Fed's preferred inflation measure, the core Personal Consumption Expenditures (PCE) index for April, is expected to rise by 0.2% from the previous month, marking the smallest increase this year. The overall PCE index is projected to remain at 0.3% for the third consecutive month. This supports the view that the Fed might lower rates this year, which is beneficial for precious metals as lower interest rates create a favorable investment environment.

With base metals, Copper prices on COMEX increased by 2.14% due to positive consumption outlooks. Following other Chinese cities, Shanghai announced the easing of home-buying restrictions yesterday, which improved the demand outlook for metals, including copper.

Additionally, the International Energy Forum (IEF) forecasts that to achieve net-zero emissions by 2050, the world will need an additional 1.46 billion tons of copper from 2018 to 2050. This translates to an annual increase of 91.3 million tons of new mining production or 194 new copper mines. This scenario implies that 6 new mines would need to come online each year.

In contrast, iron ore prices were the only commodity to decline, dropping 1.27% to $117.79 per ton, the lowest level in a week. The commodity experienced significant fluctuations.

In the morning session, Shanghai's new supportive policies bolstered market sentiment and led to a strong price increase. However, in the afternoon session, prices reversed as investors remained cautious due to weak steel demand in China. Analysts from China International Capital Corporation (CICC) noted that recent real estate stimulus measures may not directly boost steel consumption, as they are more focused on reducing existing housing inventory rather than new construction.

Source: MXV