Data from the Vietnam Commodity Exchange (MXV) showed that buying power dominated the raw material market yesterday (March 21). At the end of the day, the MXV-Index of 3 out of 4 commodity groups increased, pushing the MXV-Index up 0.3% to 2,221 points. The total trading value of the entire Exchange increased sharply by 26% to nearly VND9,000 billion, the highest since the beginning of February.
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Robusta coffee prices return to 30-year peak
According to MXV, at the end of the trading session on March 21, 7 out of 9 industrial raw material products increased in price. Of which, cocoa and coffee were the two products with the strongest increase, more than 2%.
In the coffee market, Arabica prices reversed and recovered 1.81% from the reference level; Robusta prices recovered 2.11%, reaching a 30-year peak. The weakening USD combined with the risk of supply shortage pushed Robusta prices to set a new 30-year peak.
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Hot and dry weather in Vietnam’s main coffee growing region shows no signs of abating, fueling negative sentiment about the outlook for new crop supplies in the world’s largest Robusta exporter.
In addition, the weakening of the US dollar after the US Federal Reserve (FED) interest rate meeting caused the USD/VND exchange rate to narrow and Vietnamese farmers to limit coffee sales. This made concerns about supply shortages in the market more serious.
Arabica prices also fluctuated strongly due to changes in the USD. When it first opened, coffee prices were created in the context of the FED keeping the interest rate at 5.25-5.5% in the March meeting and announcing that there would be 3 interest rate cuts this year.
In the early evening session, the upward momentum of Arabica prices was corrected when the USD recovered, causing the USD/BRL exchange rate to increase. The loosening exchange rate gap helped stimulate the demand for coffee sales of Brazilian farmers.
Elsewhere on the industrial raw material price list, sugar 11 rose 1.33% amid less-than-optimistic signs about the crop outlook in Brazil. Below-average rainfall is expected across the South-Central region of Brazil, the country’s main sugar growing region, next week. Adverse weather conditions will hamper the recovery of crop yields and tighten sugar supplies in the coming period.
Cotton prices edged up 0.04% as the market reacted to positive cotton sales in the United States. In the export report for the week ending March 14, the United States sold 92,600 bales of cotton, up 8% and 20% from the previous week and the four-week average, respectively. At the same time, the country exported 397,300 bales of cotton, the highest level in the 23/24 crop year. This reflects the increasing demand for U.S. cotton in the international market.
However, a stronger dollar index in the evening session capped the price gains. The greenback rose 0.60%, making U.S. cotton more expensive for holders of other currencies. Higher costs will limit buying in the market.
Palm oil prices, on the other hand, weakened 0.51% amid supply concerns in Malaysia. According to the Southern Peninsula Palm Oil Producers Association (SPPOMA), production in the country in the first 20 days of March increased by 22.4% compared to the same period last month.
Buying power dominates the metals market
At the end of yesterday's trading session, the metal market recorded mixed fluctuations, but buying power still dominated. For the precious metals group, while silver prices fell 0.39% to $25/ounce, mainly under pressure from macro fluctuations, platinum increased 1.51% to $913/ounce due to the impact of supply and demand.
The Swiss National Bank (SNB) officially announced yesterday that it would cut its policy rate by 25 basis points to 1.50%, a surprise move that made the SNB the first major central bank to pivot from tightening to easing. The Swiss franc fell on the move, bolstering the strength of the US dollar and pushing the Dollar Index up 0.6%. Silver, which is more sensitive to currency fluctuations than platinum, was under pressure due to its higher holding costs.
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In addition, some positive economic data from the US also reinforced the USD's upward momentum, thereby promoting selling pressure on silver. In the week ending March 16, the number of US unemployment claims reached 210,000, 2,000 lower than the forecast. In addition, the US preliminary manufacturing purchasing managers index (PMI) for March reached 52.5 points, 0.7 points higher than the forecast and the highest level since June 2022.
Platinum prices, on the other hand, have rallied sharply on concerns about supply disruptions. Following a string of South African platinum group metals (PGM) miners including Sibanye Stillwater and Anglo American Platinum, Impala Platinum’s Zimplats said on Wednesday it was introducing job cuts to protect the business from the impact of plunging PGM prices. This will limit future platinum production,
In the base metals group, COMEX copper prices fluctuated, ending the session up only 0.17% in value to $4.05/pound. COMEX copper was also under pressure from the rising USD, but risks of supply shortages due to low profit margins from refineries limiting production supported prices. Iron ore rose sharply by 3.71% to $108.72/ton.
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