Data from the Mercantile Exchange Of VietNam (MXV) shows that the global raw material commodity market continued to exhibit divergence yesterday (March 18). The green trend continued to dominate, pushing the MXV-Index up by 0.66% to 2,225 points, extending the increase for the sixth consecutive day. The total trading value on the Exchange was over 5,700 billion VND.

Oil Prices Rise by 2% Amid Geopolitical Risks

According to MXV, at the end of the trading day, all five commodities in the energy group increased in price. Notably, oil prices rose by about 2%, reaching the highest level in four months amid concerns over geopolitical risks. Additionally, signals of tightening supply and stronger demand contributed to the price increase.

By the close, WTI oil prices rose 1.94% to 82.14 USD/barrel, marking the highest closing level since October 27. Brent oil increased by 1.82% to 86.89 USD/barrel.

Over the past weekend, Ukraine continued to escalate military activities targeting Russia's energy infrastructure, causing significant damage to several refineries deep within Russian territory. Gunvor Group CEO Torbjörn Törnqvist estimated that about 600,000 barrels per day of Russia's refining capacity were affected by Ukraine's drone attacks.

On the supply side, Iraq's Oil Ministry stated that the second-largest producer in the Organization of the Petroleum Exporting Countries (OPEC) would reduce crude oil exports to 3.3 million barrels per day in the coming months to compensate for exceeding the OPEC+ quota since January. Previously, Iraq had significantly exceeded its target, pumping about 4.2 million barrels per day in January and February compared to the production target of 4 million barrels per day.

Meanwhile, data from the Joint Organisations Data Initiative (JODI) showed that Saudi Arabia's crude oil exports decreased for the second consecutive month in January, dropping by 0.2% to 6.297 million barrels per day. The trend of shrinking supply from the two leading OPEC producers has bolstered buying power in the oil market.

On the demand side, data from China's National Bureau of Statistics (NBS) indicated that China's refinery throughput reached 118.76 million tons in the first two months of 2024, equivalent to 14.45 million barrels per day, up 3% year-on-year. Strong demand for transportation fuel during the Lunar New Year holiday prompted refineries to ramp up operations.

An optimistic outlook on oil prices from Morgan Stanley also supported positive market sentiment. Specifically, the bank raised its Brent oil price forecast by 10 USD/barrel to 90 USD/barrel in the third quarter, citing tighter supply and demand with OPEC+ commitments and Russia's production cuts following recent drone attacks on its refineries. In the fourth quarter, Morgan Stanley expects oil prices to reach 85 USD/barrel, compared to the previous estimate of 80 USD/barrel.

Robusta Coffee Prices Continue to Rise Due to Supply Shortages

At the end of yesterday's trading, the green trend also dominated the industrial raw materials sector. However, the coffee market showed mixed results. Arabica prices fell by 0.66%, while Robusta prices increased by 1.06% compared to the reference. The risk of supply shortages in the market was the main factor supporting the buying power for Robusta.

Weather forecasts predict prolonged hot and dry conditions across major coffee-growing areas in Vietnam. High temperatures have raised concerns about the prospects for the new crop supply in the world's largest Robusta exporter.

For Arabica, continued improvement in inventory created optimism about market supply. By the end of March 14, the total certified Arabica inventory increased by 20,853 bags, raising the total stored coffee to 488,678 bags.

Additionally, the Dollar Index recovered by 0.13%, while Brazil's Real weakened, causing the USD/BRL exchange rate to rise by 0.68%. The widening exchange rate gap stimulated Brazilian farmers to sell more coffee, further enhancing current market supply.

In other industrial raw materials, cotton prices rose by 0.67% as the market continued to react to positive cotton sales in the US. In the export report for the week ending March 7, the US sold 85,800 bales of cotton, up 65% from the previous week. Additionally, the country exported 217,700 bales of cotton, up 4% from the 4-week average. This reflects improving demand for US cotton in the international market.

However, the stronger Dollar Index during the evening session somewhat limited the price increase. A stronger USD makes US cotton more expensive for holders of other currencies, reducing market buying power.

Sugar No. 11 prices edged up by 0.18% compared to the reference level. Mixed information about sugar production in key producing countries led to a tug-of-war session. According to Fitch Solutions, reducing cane planting areas in India's main states combined with expected reduced production in Brazil's Central-South region in the 24/25 season is a factor driving price recovery. However, this contrasts with previous forecasts from India's Sugar Organization predicting a rebound in production.

Source: MXV