Cocoa prices rose on expectations of tighter supply despite weak demand.

Silver continued to break records yesterday as prices surged for the third consecutive session, nearing $65 per ounce, while cocoa also recorded its fifth consecutive day of gains due to expectations of tightening supply. Investment flows remain strong into the commodities market. At closing, the MXV-Index rose 0.8% to 2,391 points.

Cocoa prices rose for the fifth consecutive session.

At the close of yesterday's trading session, the industrial raw materials group recorded relatively mixed movements. Notably, cocoa prices extended their gains for the fifth consecutive session, surging by nearly 1.1% to reach $6,288 per ton.

According to the Vietnam Commodity Exchange (MXV), the main driving force behind yesterday's increase in cocoa prices was primarily the expectation of tighter supply, along with supporting technical factors, although concerns about weak demand remain.

Rabobank recently lowered its forecast for the global cocoa surplus in the 2025-2026 season to 250,000 tonnes, a 23.7% decrease from the 328,000 tonnes announced in November. Prior to this, the International Cocoa Organization (ICCO) also revised its estimate for the 2024-2025 surplus down to 49,000 tonnes, while simultaneously lowering its forecast for global production to 4.69 million tonnes.

Developments in the physical market indicate that supply is tightening. Monitoring data from ICE shows that cocoa inventories at US ports have fallen to their lowest level in nearly nine months. In West Africa – the world's largest cocoa-producing region – shipments to ports in Ivory Coast decreased by 1.8% year-on-year, while Nigeria, the world's fifth-largest cocoa producer, forecasts a potential 11% drop in next season's output.

Besides supply factors, the market is also attracting attention from investment capital flows. An international source warns of the possibility of a speculative buying wave early next year when cocoa is added to the BCOM commodity index, triggering portfolio restructuring buying activities with an estimated volume equivalent to about 40% of total open interest. However, the sustainability of this trend, as well as whether it will provide the necessary liquidity for the market in the short term, still needs more time to be verified.

Conversely, consumer demand remains the main factor restraining the upward trend in cocoa prices. This was evident during the recent Halloween season, when sales during this period did not meet Hershey's expectations. In addition, the market was also impacted by a sharp decline in cocoa grinding activity in the third quarter, with grinding output in Asia down 17% and in Europe down 4.8%.

Furthermore, the European Parliament's decision to further postpone the implementation of the Anti-Deforestation Act (EUDR) for another year has somewhat eased concerns about short-term supply shortages, as imports from affected areas continue to flow into the market.

Furthermore, the outlook for the 2025-2026 harvest in Ivory Coast is showing promising signs. Local farmers expect favorable weather conditions with light rains interspersed with warm temperatures to improve the size and quality of cocoa beans during the main harvest, which begins in February next year. If these predictions materialize, global supply will be somewhat strengthened, thereby creating a better balance in the market after months of pressure from the risk of shortages.

Silver prices continue to break through newly established records.

According to MXV, at the close of yesterday's trading session, the metals market witnessed overwhelming buying pressure, with 8 out of 10 commodities simultaneously increasing in price. Silver, in particular, attracted significant investor attention, continuing to set new record highs, approaching the $65/ounce mark with a surge of 5.8% to $64.6/ounce.

MXV stated that the key driver behind the record high price of silver came from the Federal Reserve's third interest rate cut this year. Lower interest rates led to a weakening of the US dollar, making assets priced in the greenback, such as silver, more attractive. The US dollar index (DXY) continued its decline for the second consecutive session yesterday, falling to 98.35 points.

The low interest rate environment also contributes to improved borrowing capacity for businesses, thereby supporting manufacturing activity in the US – the world's second-largest consumer of industrial silver. Expectations of increased silver demand in the manufacturing sector are further bolstering the metal's upward momentum.

Along with industrial sectors, silver used in solar panel production continues to emerge as a key growth driver. According to the Silver Institute, global installed solar power capacity has increased more than tenfold in the past decade, with China contributing 51% of the increase, Europe 15%, and the US 9%. The increased investment in renewable energy by major economies shows that this is no longer a short-term trend but a long-term shift.

The International Energy Agency (IEA) forecasts that solar energy will become the world's dominant renewable energy source by 2030. Between now and then, global solar power capacity is expected to maintain a compound annual growth rate of around 17%, creating significant prospects for reshaping industrial silver demand in the long term.

Meanwhile, in terms of supply, the global silver market is not growing at the same pace as demand. Data from the Silver Institute shows that only about 28% of silver production comes from specialized silver mines; the remaining more than 70% is a byproduct of gold, copper, lead, and zinc mines. This structure makes significant fluctuations in silver production unlikely in the short term. The Silver Institute forecasts that the global silver market will enter its fifth consecutive year of deficit in 2025.

In the domestic market, as of this morning (December 12th), silver prices at major trading centers continued to rise for the third consecutive session, with an increase of approximately 2% in both buying and selling prices. In Hanoi , 999 silver was listed at around 1.983 - 2.013 million VND/ounce; in Ho Chi Minh City, the price ranged from 1.985 - 2.018 million VND/ounce.

Price list for some other types of goods