Data from the Vietnam Commodity Exchange (MXV) indicates that buying pressure continues to dominate the raw materials market as of January 24. By the end of the day, all four commodity groups saw gains, pushing the MXV-Index up by 1.08% to 2,145 points. The total trading value across the exchange reached over VND 3,800 billion. Following the trend from the previous day, many commodities remained in the green.

US Oil Inventories Drop More Than Expected, Driving Prices Up

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

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

The US Energy Information Administration (EIA) reported a surprising decline of 9.2 million barrels in commercial oil inventories for the week ending January 19, significantly exceeding the American Petroleum Institute's (API) estimate of 6.6 million barrels and Reuters' forecast of a 2.2 million barrel decrease. Meanwhile, gasoline inventories increased by 4.9 million barrels, lower than the API’s expected increase of 7.2 million barrels. Distillate inventories fell by 1.4 million barrels, compared to analysts’ expectations of a 300,000-barrel increase.

Additionally, oil inventories at Cushing, Oklahoma, the delivery point for WTI futures, decreased by 2 million barrels. Notably, US oil production also dropped sharply by 1 million barrels per day to 12.3 million barrels per day. The tightening supply in the US, exacerbated by cold weather disrupting production, has led to strong buying activity in the market.

From a macroeconomic perspective, 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 counteract the declining stock market. Expectations for positive growth in China’s economy are likely to drive oil consumption, supporting higher oil prices.

Moreover, positive economic data from the US have raised expectations that the world’s largest economy 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 points, 2.4 points higher than forecasted and the highest since November 2022. Meanwhile, the services PMI stood at 52.9 points, 1.9 points above forecasted levels and the highest since July 2023.

In another development, natural gas prices increased by nearly 8% due to forecasts of higher heating demand and reduced production amid cold weather freezing wells and other equipment. LSEG reported that natural gas production in the 48 contiguous US states has dropped 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 Stalemate, Prices Rise for Fifth Consecutive Session

The corn market has broken its previous stalemate, recording its fifth consecutive session of price increases. On the supply side, the situation in Brazil’s harvest season continues to support prices. Additionally, concerns about reduced export volumes from Brazil have further driven buying interest in the market.

The Rural Economy Department of Parana (Deral) reported that although most first-season corn in the northern and southern parts of the state is ready for harvest, actual yields are significantly lower than initially expected. In the western and central-western regions of Parana, the first-season corn harvest is progressing slowly, while second-season corn planting is being accelerated due to recent rains. With lower yields, Brazilian farmers are likely to limit sales with hopes for higher domestic prices, which supports the market.

Wheat was the strongest performer among agricultural products on the trading day, marking its sixth consecutive session of price increases. From the opening bell, buying pressure dominated the market amid a sharp drop in the dollar index. Additionally, concerns about supply from the Black Sea region have spurred buying interest in wheat.

According to a senior Ukrainian official, the country’s grain exports by sea in January could drop by 20% compared to the previous month due to the Red Sea crisis. The Houthi attacks on ships in the 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 exports go to China. Analysts predict that many shipments may divert from the Suez Canal - Red Sea route, hampering Ukraine’s exports.

Domestically, on the morning of January 24, prices for South American corn imported to Vietnamese ports decreased slightly. At Cai Lan port, February delivery South American corn was priced around VND 6,500/kg, while March delivery prices ranged from VND 6,300 to VND 6,500/kg. At Vung Tau port, imported corn prices were reported to be VND 100/kg lower than at Cai Lan port.

Source: MXV