Data from the Mercantile Exchange Of VietNam (MXV) indicates that buying pressure continued to dominate the commodity market on January 24. By the end of the day, the MXV-Index saw an increase across all four commodity groups, rising by 1.08% to 2,145 points. The total trading value on the exchange reached over 3,800 billion VND. Continuing the trend from the previous day, many commodities remained in the green.

US Oil Stocks Drop More Than Expected, Driving Oil Prices Up

According to MXV, on January 24, oil prices surged due to a larger-than-expected drop in US oil inventories. Additionally, China's economic stimulus measures added to the optimistic outlook for oil consumption in the world's largest oil importer, further supporting oil prices.

By the close of trading, WTI crude oil rose by 0.97% to $75.09 per barrel, while Brent crude oil increased by 0.62% to $80.04 per barrel.

The US Energy Information Administration (EIA) reported a surprising decrease of 9.2 million barrels in commercial oil inventories for the week ending January 19, significantly more than the 6.6 million barrel drop reported by the American Petroleum Institute (API) and the 2.2 million barrel decrease forecasted by Reuters. Conversely, gasoline inventories rose by 4.9 million barrels, much less than the 7.2 million barrel increase reported by API. Distillate inventories decreased by 1.4 million barrels, contrary to the expected increase of 300,000 barrels.

Additionally, inventories at the Cushing, Oklahoma storage hub, the delivery point for WTI futures, fell by 2 million barrels. Notably, US oil production unexpectedly dropped by 1 million barrels per day to 12.3 million barrels per day. Tightened supply in the US due to cold weather disrupting production activities led to strong buying pressure in the market.

On the macro front, the Governor of the People's Bank of China (PBOC) announced a 0.5 percentage point cut in the reserve requirement ratio (RRR) effective February 5. This underscores the increasing urgency of the Chinese government to bolster the economy and prevent further declines in the stock market. Expectations of positive economic growth in China are expected to drive oil demand, reinforcing the upward trend in oil prices.

Additionally, positive economic data from the US increased expectations that the largest economy in the world will achieve a soft landing. Preliminary reports from S&P Global show a notable recovery in US business activity in January 2024, with the manufacturing Purchasing Managers' Index (PMI) reaching 50.3, 2.4 points higher than forecasted, and the highest since November 2022. The services PMI was at 52.9, 1.9 points above forecasted, and the highest since July 2023.

In another development, natural gas prices rose nearly 8% due to forecasts of increased heating demand and reduced production amid freezing temperatures affecting wells and other equipment. LSEG reported that natural gas production across 48 US states had decreased to 102.9 billion cubic feet per day (bcfd) since early January, down from a record monthly high of 108.0 bcfd in December 2023.

Corn Breaks Coiling Trend, Prices Rise for Fifth Consecutive Session

The corn market broke its coiling trend and recorded its fifth consecutive session of rising prices. On the supply side, the situation with the Brazilian harvest once again supported prices. Concerns about reduced export volumes from Brazil also contributed to buying pressure in the market.

The Paraná Rural Economy Secretariat (Deral) reported that although much of the first corn crop in northern and southern Paraná is ready for harvest, actual yields are significantly lower than initially expected. In the western and central-western regions of Paraná, the harvest is progressing slowly, while planting of the second corn crop is being accelerated due to recent rains. With low yields, Brazilian farmers are likely to continue limiting sales in anticipation of higher domestic prices, which supports the market.

Wheat was the top performer among agricultural products on the trading day, marking its sixth consecutive session of rising prices. From the opening, buying pressure dominated the market amid a significant drop in the dollar index. Furthermore, concerns about supply from the Black Sea region also drove buying interest in wheat.

According to a senior Ukrainian official, the country's grain exports by sea in January may fall by 20% compared to the previous month due to the Red Sea crisis. The Houthi attacks on ships traveling through this area have disrupted part of the trade flow between Europe and Asia. The Red Sea route is particularly important for Ukraine as nearly one-third of its export goods go to China. Analysts forecast that many shipments might be redirected from the Suez Canal-Red Sea route, hindering Ukraine's exports.

On the domestic market, prices for imported South American corn at Vietnamese ports slightly decreased on the morning of January 24. At Cai Lan Port, February delivery South American corn was priced around 6,500 VND/kg. For March delivery, the offering price ranged from 6,300 to 6,500 VND/kg. Meanwhile, prices at Vung Tau Port were 100 VND/kg lower than those at Cai Lan Port.

Source: MXV