The MXV-Index commodity index weakens, coffee prices still reach new highs.
12 thg 4, 2024
Data from the Vietnam Commodity Exchange (MXV) shows that the global raw materials market closed yesterday (April 11) with 22 out of 31 commodities falling in price. Selling pressure dominated across all four groups of commodities, pulling the MXV-Index down by 0.6% to 2,302 points. The total trading value across the exchange reached nearly 7,100 billion VND.
Agricultural Market Turns Red
The agricultural group closed yesterday with 6 out of 7 commodities ending in the red. The market received a series of important reports in the evening session, which was the main factor leading to the declines in agricultural prices.
Despite a positive start in the morning session, corn prices quickly turned weak in the evening session when the Export Sales and April World Agricultural Supply and Demand Estimates (WASDE) reports were released. With most of the reported data being bearish, corn prices ended the day down by as much as 1.27%.
In terms of supply, the Rosario Grain Exchange (BCR) in Argentina lowered its forecast for Argentina's 2023-2024 corn production to 50.5 million tons, down 6.5 million tons from the previous estimate. The main reason is the outbreak of brown plant hoppers carrying diseases, which has damaged yields. This has raised concerns about the crop outlook in Argentina and supported corn prices in the morning session.
On the demand side, according to the Export Sales report released last night, the USDA reported that US corn sales for the 2023-2024 season in the week of March 29 to April 4 reached 325,479 tons, down 65.7% from the previous week and below market expectations. This reflects a significant decline in international demand for US corn, putting pressure on prices.
Regarding the WASDE report, the export outlook for major producers like Brazil and Argentina was maintained by the USDA despite recent negative crop conditions. In the US, although the 2023-2024 ending stocks were cut by 50 million bushels from the March report to 2.122 billion bushels, it was still higher than the market expectation of 2.102 billion bushels. This also added pressure on prices.
In another notable development, wheat prices also fell by 1.21%. The main pressure on prices came from the data in the April WASDE report. The decline in wheat prices was only halted as prices approached the support level of 200 USD/ton.
The USDA forecasts that US wheat ending stocks for the 2023-2024 season will reach 698 million bushels, up from 673 million bushels in the March report and higher than the average analyst estimate of 690 million bushels. The increase in US wheat stocks is mainly due to lower domestic demand. In the context of sluggish US wheat exports, this has put significant pressure on prices.
Coffee Prices Continue to Hit New Highs
Red dominated the industrial commodities price board. Cotton prices hit their lowest in nearly three months due to pressure from a stronger USD, which made holding and trading costs more expensive, thereby limiting market buying power.
Additionally, the less optimistic demand outlook reflected in US sales data also contributed to the pressure on prices. In the weekly export report ending April 4, the US sold only 81,500 bales of cotton for the 2023-2024 season, down 4% from the previous week and 10% from the 4-week average. Meanwhile, cotton exports for the week were only 274,100 bales, down 25% and 23% respectively from the previous week and the 4-week average.
On the other hand, coffee prices were the bright spot of the entire market as they continued to hit new highs yesterday. At the close, Arabica prices rose to their highest level in 30 months amid concerns about new crop supply as La Nina is forecasted to return, negatively impacting the crop.
The US weather forecasting agency has indicated that La Nina is expected to develop from June to August this year. This raises concerns about frost during the coffee harvest period in Brazil and floods affecting the 2024-2025 coffee harvest in Vietnam.
However, the Brazilian Institute of Geography and Statistics (IBGE) raised its estimate for Brazil's 2024 coffee production to 60.2 million bags, up 1.4% from the previous forecast and 5.6% from 2023.
Robusta prices hit a new 30-year high, reaching up to 3,900 USD/ton. In Vietnam, prolonged dry conditions have increased the number of young coffee plants dying. This could further reduce the 2024-2025 coffee crop yield compared to the current crop, which is also one of the reasons why Vietnamese farmers are holding onto their coffee longer. Farmers hoarding coffee have exacerbated the supply shortage on the market, driving prices to new highs.
In the domestic market, as of the morning of April 11, domestic coffee purchase prices exceeded 107,000 VND/kg after a strong increase of 1,200 VND/kg from the previous day. According to MXV, domestic coffee prices are fully capable of reaching 110,000 VND in the next few sessions.
Source: Vietnam Commodity Exchange (MXV)
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