Data from the Vietnam Commodity Exchange (MXV) indicates that the commodity market experienced significant volatility during the week ending March 8. This was reflected in the distinct price fluctuations across various commodities. Notably, the agricultural price index dropped early and mid-week but surged towards the end, differing from the energy sector's trend. By the end of the week, green prices dominated the commodity board, pushing the MXV Index up by 0.2% to 2,145 points. The average daily trading value across the exchange increased sharply by 30.7% compared to the previous week, reaching over 6.1 trillion VND.

Weakening USD Boosts Metal Prices

According to MXV, during the trading week from March 4 to 10, most metal prices saw increases, with 9 out of 10 metals rising. The weakening of the US Dollar, driven by expectations that the Federal Reserve (FED) might cut interest rates, spurred strong buying of metals. Precious metals benefited the most, with silver increasing significantly by 5.07% to $24.54 per ounce, and platinum rising by 3.02% to $914.8 per ounce.

The greenback is under pressure due to signs of a slowing US economy, reflected in some production and service data, particularly employment figures for February. This has led to significant buying of silver and platinum, which are sensitive to currency fluctuations, as holding costs become less expensive and safe-haven demand rises.

Specifically, the US service sector showed signs of weakening with the February Purchasing Managers' Index (PMI) for non-manufacturing at 52.6 points, 0.4 points below expectations and lower than January's 53.4 points, according to data from the Institute for Supply Management (ISM). Notably, the Non-Farm Payrolls (NFP) report showed the unemployment rate for February unexpectedly surged to 3.9%, 0.2 percentage points above forecasts and the highest in two years.

Previously, the FED Chairman hinted at a possible rate cut "not far off" in the future, which has also strengthened precious metals. Silver even reached its highest level in over two months during the week.

For base metals, positive trade signals from China also supported price increases, alongside support from the USD. COMEX copper rose by 0.78% to $3.89 per pound, and iron ore recovered by 1.79% to $113.93 per ton.

Data from the General Administration of Customs of China showed that China's export and import growth exceeded expectations in the first two months of the year, increasing by 7.1% and 3.5% respectively. For copper and iron ore, import volumes rose significantly, reflecting improved demand early in the year. China's copper imports totaled 902,000 tons in the first two months of 2024, up 2.6% year-over-year, while iron ore imports increased by 8.1% to 209.45 million tons.

Additionally, the Governor of the People's Bank of China (PBOC) indicated that there is still room to cut the reserve requirement ratio (RRR) for banks, which has also contributed to increased buying of base metals during the week.

Agricultural Market on the Rebound

By the end of trading on March 8, five out of seven agricultural commodities saw price increases of 2.2% or more. Soybean futures for May extended their recovery from the previous week, closing up nearly 3%.

In the early part of the week, prices were relatively subdued as the market awaited the March World Agricultural Supply and Demand Estimates (WASDE) report. Strong buying only emerged in the final two sessions of the week due to positive US export results and updated forecasts for the South American growing season in the WASDE report.

According to the Export Sales report, the USDA reported that the US sold 613,534 tons of soybeans for the 2023/24 crop year during the week of February 23-29, up nearly 300% from the previous week. This figure also exceeded analyst forecasts of 175,000 - 600,000 tons. China was the largest buyer of US soybeans, purchasing over 269,000 tons, with demand rebounding post-Lunar New Year, which significantly impacted soybean prices.

In the WASDE report, the USDA maintained its forecast for Argentina's 2023/24 soybean production at 50 million tons, contrary to market expectations of a slight increase to 50.23 million tons. Conversely, the USDA lowered its forecast for Brazil's 2023/24 soybean production to 155 million tons, a decrease of 1 million tons from the February report, reflecting adverse weather impacts. Although the USDA's cut to Brazil's soybean production was smaller than analysts' expectations of nearly 3.7 million tons, it still indicated a potential reduction in supply from Brazil, affecting prices.

Similar to soybeans, the prices of two soybean products also closed the week positively. Negative forecasts for the Argentine soybean crop for the 2023/24 season supported soybean meal prices, while increased demand from India drove soybean oil purchases. The Rosario Grains Exchange report indicated that a strong La Niña event is expected in Argentina in October, bringing dry and hot weather with lower rainfall, threatening the soybean meal production outlook. Meanwhile, India is expected to import 4.3 million tons of soybean oil for the 2023/24 season, up from 3.5 million tons the previous year.

On the domestic market, as of March 10, the prices of imported South American soybean meal at Vietnamese ports showed little change. The offered price 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, prices were about 100 VND lower compared to Cai Lan port.

Source: MXV