According to data from the Mercantile Exchange Of VietNam (MXV), the global commodity market experienced significant volatility during the past trading week (March 4 - 8). This was evident in the clear divergence and fluctuations in the prices of various commodities. Notably, the agricultural commodity index fell at the beginning and mid-week but surged towards the end, differing from the trend in the energy sector. At the end of the week, green dominated the raw material price board, pushing the MXV-Index up by 0.2% to 2,145 points. The average daily trading value across the exchange exceeded 6,100 billion VND, up sharply by 30.7% compared to the previous week.

Weakening USD Boosts Metal Prices

According to MXV, at the end of the trading week from March 4 - 10, green almost covered the metal price board, with 9 out of 10 items increasing in price. The weakening of the U.S. Dollar due to expectations of the Federal Reserve (FED) cutting interest rates has strongly boosted metal buying. Among these, precious metals benefited the most, with silver rising 5.07% last week to 24.54 USD/ounce. Platinum prices also increased by 3.02% to 914.8 USD/ounce.

The greenback is under pressure due to signs of slowing U.S. economic growth, reflected in some data from the manufacturing and services sectors, and particularly the employment situation in February. This is the main factor helping silver and platinum, which are sensitive to currency fluctuations, receive significant buying interest as holding costs become less expensive and safe-haven demand is activated.

Specifically, U.S. service activity showed signs of weakening as the non-manufacturing purchasing managers' index (PMI) for February reached 52.6 points, 0.4 points lower than the forecast and down from 53.4 points in January, according to data from the Institute for Supply Management (ISM). Notably, the non-farm payrolls (NFP) report showed that the U.S. unemployment rate in February unexpectedly surged to 3.9%, 0.2 percentage points higher than the forecast and the highest level in two years.

Earlier, the FED chairman had also hinted at the possibility of a rate cut "not far" in the future. This belief also supported the position of precious metals during the week. Silver even hit its highest level in over two months in one session.

For base metals, more positive signals in China's trade activity also drove prices up, in addition to support from the USD. COMEX copper prices increased by 0.78% to 3.89 USD/pound. Iron ore prices also rebounded by 1.79% to 113.93 USD/ton.

Data from China's General Administration of Customs showed that China's export and import growth both exceeded expectations in the first two months of the year, increasing by 7.1% and 3.5% year-on-year, respectively. For copper and iron ore specifically, import volumes both increased significantly, reflecting improved demand early this year.

China's copper imports reached 902,000 tons in the first two months of 2024, up 2.6% year-on-year, while iron ore imports rose 8.1% year-on-year in the first two months, totaling 209.45 million tons.

Additionally, the governor of the People's Bank of China (PBOC) indicated that there is still room to cut the required reserve ratio (RRR) for banks. This optimistic sentiment also contributed to buying interest in base metals last week.

Agricultural Market on the Rebound

Last week, by the close of trading on March 8, 5 out of 7 agricultural commodities saw price increases of 2.2% or more. Among these, the price of May soybean contracts continued to recover from the previous week, closing with an increase of nearly 3%.

During the early sessions of the week, prices were relatively dull as the market awaited the March World Agricultural Supply and Demand Estimates (WASDE) report. Buying interest was strongly boosted in the last two sessions of the week thanks to positive U.S. export results and the latest forecasts on South American crop prospects in this month's WASDE report.

In the Export Sales report, the USDA reported that the U.S. sold 613,534 tons of soybeans for the 2023/24 season during the week of February 23-29, nearly a 300% increase from the previous week. This figure also exceeded analysts' expectations of 175,000 - 600,000 tons. During the week under review, China was the largest buyer of U.S. soybeans, with a volume of over 269,000 tons. The recovery in Chinese buying interest after the Lunar New Year holiday had a strong bullish impact on soybean prices.

For the WASDE report, the USDA maintained its forecast for Argentina's soybean production for the 2023/24 season at 50 million tons, contrary to market expectations that this figure would be slightly raised to 50.23 million tons. Meanwhile, the USDA lowered its forecast for Brazil's soybean production for the 2023/24 season to 155 million tons, down 1 million tons from the February report, reflecting the adverse weather impact on the crop. Although the USDA's cut to Brazil's soybean production was still lower than analysts' expected reduction of nearly 3.7 million tons, it indicates a potential supply shortfall from Brazil this year and impacted prices.

Similarly to soybeans, the prices of two processed products also closed last week in the green. Negative crop prospects in Argentina for the 2023/24 season supported soybean meal prices, while increased demand from India boosted buying interest for soybean oil. A report from the Rosario Grain Exchange indicated a 77% chance of a strong La Nina occurring in Argentina in October this year, bringing hot and dry weather. This threatens Argentina's soybean meal production outlook for the 2023/24 season. Meanwhile, India is expected to import 4.3 million tons of soybean oil in the 2023/24 season, up from 3.5 million tons in the previous season.

In the domestic market, as recorded on March 10, the price of imported South American soybean meal at Vietnamese ports remained largely unchanged. Accordingly, the offered price of South American soybean meal at Cai Lan port was 12,050 VND/kg. For April delivery, soybean meal prices ranged around 11,300 - 11,350 VND/kg. At Vung Tau port, the offered price was about 100 VND lower than at Cai Lan port.

Source: MXV