According to the Mercantile Exchange Of VietNam (MXV), investment capital flowed actively into the global commodity markets on the first trading day of the week (August 26). Strong buying activity occurred in major commodity groups, with the energy and industrial materials sectors leading the market's upward trend, as many commodities saw price increases. At the close, the MXV-Index rose by 1.1% to 2,159 points.

Geopolitical Tensions Escalate, Oil Prices Continue to Surge

At the end of yesterday's trading session, global oil prices surged due to heightened concerns about supply following reports of escalating conflicts in the Middle East and production cuts in Libya. By the session's close, WTI oil prices had increased by 3.46% to $77.42 per barrel, while Brent crude oil prices rose by 3.05% to $81.43 per barrel.

Two Egyptian security sources reported that during ceasefire talks in Gaza held in Cairo last Sunday (August 25), both Hamas and Israel failed to agree on several compromises proposed by mediators. This has cast doubt on the success of U.S. efforts to end the 10-month-long conflict.

In a separate development, the Iran-backed Hezbollah movement launched a series of attacks on Israel. The actions of the Lebanon-based group are seen as a preemptive strike against Israel. Additionally, the U.S. has repeatedly warned of a similar attack on Israel from Iran, which has continuously issued retaliatory threats. The risk of a conflict that could erupt at any moment has fueled the rise in oil prices.

Furthermore, oil prices also spiked after the Libyan government announced the closure of all oil fields, halting production and exports. The National Oil Corporation (NOC), which controls the country's oil resources, did not confirm this. However, Libya's Sirte Oil Company, a subsidiary of NOC, announced that it would begin partially reducing production.

According to UBS Bank, the biggest risk to the oil market is likely the drop in Libyan oil production amid political tensions in the country, with the risk of production falling from the current 1 million barrels per day to zero.

Market momentum was also boosted by signals of interest rate cuts from the U.S. Federal Reserve (Fed). Expectations of a Fed policy pivot have also pressured the U.S. dollar, with the Dollar Index falling to the 100-point level for the first time in two years. The weaker dollar, which is now more cheaply valued, has further driven buying activity in the market.

Arabica Coffee Prices Continue to Climb to a 2.5-Year High

According to MXV, by the close of the August 26 trading session, Arabica coffee prices had risen by 0.95%, reaching a 2.5-year high, continuing the upward trend from the end of last week. Concerns about drought in Brazil and a tightening global coffee surplus are the primary factors supporting prices.

In Brazil, drought conditions in the Southeast—Brazil's main coffee-growing region—are expected to last until mid-September. This could negatively impact coffee trees that are flowering for the 2025-2026 harvest, potentially driving supply to lower levels.

Additionally, a Reuters survey found that many exporters and analysts believe that coffee supplies for the 2024-2025 season may be tight. Production is expected to exceed demand by only 150,000 bags, down from an estimated surplus of 750,000 bags for the 2023-2024 season. With a shrinking production surplus, survey participants predict that Arabica coffee prices will rise to 260 cents per pound by the end of this year, 10 cents higher than the closing price on August 26.

Robusta coffee prices are also hovering at record highs amid concerns about a supply shortage in Vietnam. On the domestic market, as of this morning (August 27), the price of raw coffee beans in the Central Highlands and southern provinces ranged from 119,200 to 120,200 VND/kg, up by 200-400 VND/kg compared to the end of last week.

Leading the price increase in the industrial materials group in yesterday's session was raw sugar, which rose by 3.53%, marking the fourth consecutive session of gains. Production risks in Brazil have prompted investors to increase their buying activity in recent sessions, supported by the rise in crude oil prices yesterday.

Traders reported that a major fire in Brazil, the world's largest sugar producer and exporter, has destroyed thousands of sugarcane fields, leading to the closure of a large sugar mill.

Additionally, a survey by S&P Global Commodities Insights found that sugar production in Brazil for the first half of August is expected to reach 3.28 million tons, down 5% compared to last year. This week, the Brazilian sugarcane industry association UNICA is expected to release production data for the same period.

Source: MXV