Commodity prices will continue to fluctuate due to unpredictable changes in supply and demand

The global raw material market closed the first half of 2024 with many bright spots as a series of commodities raced to record highs. The most notable developments were in the metal and industrial raw material group. According to the Vietnam Commodity Exchange (MXV), entering the third quarter, commodity prices will continue to fluctuate strongly due to unpredictable changes in the world supply-demand and macro picture.

Buying power dominates commodity markets in first half of year

According to data from MXV, at the end of the trading day on July 23, the MXV-Index closed at 2,160 points. Compared to the beginning of the year, this index has increased by 2.3%, reflecting the general upward trend on the market. commodity market world raw materials. Of which, industrial raw materials and metals are the two groups leading the price increase trend in the whole market. Since the beginning of the year, the MXV-Index Industrial and Metals indexes have recorded increases of 18.5% and 6.7%, respectively.

Explaining this price increase, MXV said that the risk of serious supply shortage in the first months of this year was the main reason that promoted the increase in prices of industrial and metal products.

Specifically, in the early stages of the year, prolonged drought has caused output to decrease. coffee Vietnam's 2024-2025 crop is at risk of falling to 23.5-25 million bags, the lowest level in the past 13 years. Meanwhile, in another major coffee producing country, Brazil, uneven fruit quality has limited positive expectations for the new crop's coffee output. In the second 2024 coffee crop survey report, the Brazilian government 's Crop Supply Agency (CONAB) cut 600,000 bags of Robusta coffee compared to the first report, down to 16.7 million bags.

Faced with a series of supply challenges, as of July 23, Robusta coffee prices recorded an increase of 62% compared to the beginning of the year. Notably, the price of this commodity set a historical peak on July 12 when it climbed to 4,849 USD/ton. "Going one step at a time" with the world market, the price of green coffee beans in Vietnam set a historical high on April 30 when it reached 134,400 VND/kg, an increase of about 70% compared to the beginning of the year and more than double the price of the same period last year. As of July 24, the price of green coffee beans in the Central Highlands and the Southern provinces was recorded at around 126,000 VND/kg, a high level compared to the same period in previous years.

Similarly, for the metal group, the risk of supply shortage is also a major factor supporting prices of commodities in the group. Notably, copper price rose above $11,200 a tonne in late May, its highest price ever recorded. During this period, the global refined copper market is forecast to be in a deficit of 428,000 tonnes this year, compared to the 130,000 tonnes deficit recorded last year.

The precious metals group also recorded impressive increases. There was a time when silver price climbed to the price range of 32 USD/ounce, the highest level in 11 years. In addition to the support of supply-demand factors, the precious metal group also benefited from the increased demand for shelter in the context of many fluctuations in the world economy . Although the increase of items in the metal group began to slow down since June and is in the process of adjusting down again. However, in general, the strong breakthrough in the second quarter has helped this group become one of the bright spots of the commodity market in the first half of this year.

Commodity prices tend to fluctuate strongly in the third quarter.

More than half a year has passed, the world's raw material prices have been, are and will continue to fluctuate in the coming time. Commenting on the trend of commodity prices, Mr. Duong Duc Quang, Deputy General Director of MXV said : “The figures show that the world’s raw materials have had a positive first half of the year. The price movements have continued to fluctuate, creating attractiveness for investors and being consistent with the nature of the world-scale market. In the coming period, the market is likely to continue to fluctuate strongly due to unpredictable variables.”

MXV Deputy General Director Duong Duc Quang.

For agricultural products and industrial raw materials, weather remains one of the key factors affecting price increases in the third quarter of this year. For coffee, the market is focused on concerns that La Nina will replace El Nino by the end of this year, which could cause frequent storms and floods in the Central Highlands. Coffee prices therefore have a lot of potential to stay higher than the same period in previous years, due to generally tight supply. However, prices are unlikely to surpass the historical peak of nearly VND135,000/kg recorded in April.

Meanwhile, for the group Metals, price movements are expected to be differentiated between base metals and precious metals. Limited demand could put pressure on base metals, especially copper and iron ore. Currently, inventories of these two metals in China, the world's largest metal consumer, are still at their highest levels in many years. Moreover, the third quarter is usually the low season for iron ore consumption in this country. Therefore, iron ore prices are likely to fluctuate around 100-115 USD/ton and are unlikely to reverse sharply during this period.

On the other hand, precious metals have a brighter prospect of price increases, as the US Federal Reserve (FED) is expected to begin easing monetary policy from September. If the FED lowers interest rates as expected, this will create a good opportunity for precious metals to increase in price, because this group is very sensitive to interest rates and currency fluctuations. Silver or platinum prices may gradually regain momentum from the middle of the third quarter and soon conquer the peak set at the end of May. In addition, this is considered a safe haven investment channel, so whenever geopolitical conflicts show signs of escalation, precious metal prices will still benefit.

Source: https://baolangson.vn/gia-hang-hoa-se-con-bien-dong-truoc-thay-doi-kho-douan-cua-cung-cau-5016221.html