According to data from the Mercantile Exchange Of VietNam (MXV), at the close of trading yesterday (January 8), the red trend completely dominated the raw material commodity price board. There were 22 out of 31 commodities being traded globally that simultaneously decreased in price, pulling the MXV-Index down by 1.37% to 2,089 points. The trading value reached nearly 4,500 billion VND.

Oil Prices Plunge Due to Weak Demand Concerns

According to MXV, at the end of the trading day on January 8, oil prices plummeted due to concerns over weak demand. Additionally, selling pressure was boosted following reports that the Houthi rebels and shipowners had reached some agreements on safe passage.

By the close, WTI oil prices fell by 4.1% to 70.77 USD/barrel. Brent oil decreased by 3.4% to 76.12 USD/barrel.

The oil market witnessed strong selling pressure right from the start of the session after the world’s leading oil exporter, Saudi Arabia, significantly reduced the price of Arab Light oil for February 2024 delivery to Asia. Amid competition from rival suppliers and concerns over increased supply, state-owned energy giant Saudi Aramco cut the official selling price (OSP) of Arab Light oil for February 2024 delivery to Asia by 2 USD/barrel to 1.5 USD/barrel below the Oman/Dubai quotes, the lowest since November 2021. This is the largest cut in 13 months but was in line with market expectations, indicating that the physical market remains weak.

Adding to the pressure on oil prices, a Reuters survey showed that the oil output of the Organization of the Petroleum Exporting Countries (OPEC) averaged 27.88 million barrels per day in December 2023, up by 70,000 barrels per day from the previous month, with the largest increases coming from Iraq and Angola. Weak demand, while supply shows signs of increasing, will increase the market surplus, weighing on oil prices.

Notably, selling pressure increased significantly after ShippingWatch reported that some shipping companies had reached agreements on safe passage with the Houthi rebels, alleviating concerns about supply disruptions in the Red Sea, one of the world’s critical shipping routes. However, two major shipping companies, Maersk and Hapag-Lloyd, denied having such agreements.

Furthermore, according to data from the Intercontinental Exchange Inc (ICE) and the Commodity Futures Trading Commission (CFTC), hedge funds added about 61,000 short positions in Brent and WTI futures and options contracts in the week ending January 2. This is the largest short position since March 2023 and the second largest since 2017, indicating that speculators are betting on a sharp price decline in the near future.

Coffee Prices Continue to Diverge

At the close of yesterday’s trading session, the prices of the two coffee commodities continued to diverge. Arabica prices fell by another 0.77% to the lowest level in a month. Conversely, Robusta prices surged by 3.22%, marking the third consecutive recovery session.

At the start of the session, prices continued the downward trend from the end of last week as the market continued to react to positive supply signals. The Brazilian government reported that the country exported 4.06 million 60kg bags (equivalent to 243,560 tons) of coffee beans in December. This is the highest monthly coffee export volume in the past three years, up by 33.75% and 3.77% compared to the same period in 2022 and November 2023, respectively.

However, by mid-evening, the Dollar Index fell, dragging down the USD/BRL exchange rate. The narrowing exchange rate gap caused concerns among Brazilian farmers, limiting coffee sales due to lower foreign exchange earnings.

Meanwhile, the Robusta market is waiting for Vietnam's December coffee export data amid concerns that farmers are limiting sales.

In the domestic market, as recorded yesterday morning (January 9), the price of unprocessed coffee in the Central Highlands and Southern provinces also slightly increased by 100 VND/kg. Accordingly, domestic coffee is currently being purchased at around 67,800 - 68,600 VND/kg.

Other Commodities

Sugar No. 11 prices increased by nearly 3%, returning to the highest level in over a week. Observers believe that the strong increase in production in Brazil’s Central-South region has influenced the recent downward price trend. However, concerns about crops in Asia, particularly in India and Thailand, remain. Rainfall in São Paulo state, Brazil, has been much lower than average, which could hinder ideal growth for the 2024 crop.

March cotton contract prices also increased by 0.29% due to a weakening USD at the beginning of the week. Specifically, the Dollar Index lost 0.2%, reducing the strength of the USD and making US cotton cheaper for holders of other currencies. Lower costs have stimulated buying power and prevailed.

Crude palm oil prices increased by 0.3%, marking the third consecutive gain. Anilkumar Bagani, head of research at Sunvin Group, said that delays in soybean oil and sunflower oil shipments amid tensions in the Red Sea are also supporting current palm oil prices.

Source: MXV