According to the Mercantile Exchange of Vietnam (MXV), selling pressure continued to dominate yesterday's trading session (September 3). In the energy market, 4 out of 5 commodities saw sharp price drops ranging from 2% to 5.5%. Additionally, red dominated the metal and industrial raw material sectors. Agricultural products were the only group to experience price gains, driven by adverse weather conditions in South America that severely impacted harvest yields and increasing demand for U.S. soybeans. At the close, the MXV-Index dropped by 1.38% to 2,099 points.

Global Oil Prices Plummet

The energy market was awash in red during yesterday's trading session. Apart from natural gas, which rose 3.57% to $2.2/MMBtu, all other commodities plunged. At the close, WTI crude oil was priced at $70.34 per barrel, down 4.36%. Similarly, Brent crude oil fell nearly 4.9% to $73.75 per barrel.

Oil prices dropped to their lowest levels in nearly nine months as signs emerged of a resolution to the dispute that had halted Libya's crude oil production and exports. Specifically, Libya’s legislative bodies have agreed to appoint a new central bank governor within 30 days after UN-brokered negotiations.

At the close of the previous trading week (August 26 - September 1), WTI oil prices had fallen by 1.71%, while Brent prices declined by 2.56%. Oil prices began to weaken again in late August after Reuters reported that OPEC might gradually lift its production cut policy starting in October, alongside expectations of Libya’s production resuming.

According to Reuters, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) may start easing production cuts in October. If OPEC+ decides to begin increasing output at that time, the additional supply could offset much of the lost output from Libya, a member of the group, which has been disrupted for some time.

Moreover, Libya's Sarir, Messla, and Nafoura oil fields announced last weekend that they had received directives to resume production, following a political stalemate that had shut down most of the country’s oil fields. Libya had previously lost around 700,000 barrels per day due to the conflict. The expectation of a restored supply has put downward pressure on oil prices.

Agricultural Market Thrives After U.S. Holiday Break

At the close of the first trading session after the U.S. holiday, many agricultural products experienced price increases ranging from 1% to 2.5%. Soybean prices rose more than 1%, reaching their highest level in nearly four weeks. The market was buoyed by improving demand prospects for U.S. soybeans.

In its Export Inspections report, the U.S. Department of Agriculture (USDA) stated that soybean shipments for the week ending August 29 reached 496,000 tons, up from 419,000 tons the previous week. Additionally, in its Daily Export Sales report, the U.S. announced the sale of a new order of 132,000 tons of soybeans for delivery in the 2024-2025 crop year to China. Positive shipping data and strong demand indicate that U.S. exports are picking up again, which helped support prices yesterday.

The Mato Grosso Institute of Agricultural Economics (Imea) estimated that soybean production for the 2024-2025 crop year in Mato Grosso, Brazil's largest soybean-producing state, will reach 44.04 million tons. While there was no adjustment from the previous report, Imea issued a warning about the expected drought in September, the month marking the start of soybean planting. Forecast models indicate that rainfall in September will likely be below the historical average across Mato Grosso. This could affect the planting progress of soybeans, and if rainfall does not return to normal, it could also impact the yield in early planting areas due to lower-than-expected soil moisture.

Wheat prices saw an increase of more than 3%, making it the strongest performer among agricultural products. This marks the fifth consecutive session in which prices have been supported by concerns about global supply.

In Brazil, the wheat harvest is progressing faster in Paraná, the country's largest wheat-producing state. However, both the yield and quality of harvested wheat are lower than farmers had hoped, largely due to severe frost just before harvest time.

Source: MXV