Coffee prices break a new record

In the industrial raw materials market, two coffee commodities continuously broke records. Notably, the price of Arabica coffee is nearing the unprecedented mark of $ 6,000/ton—a historic high. Meanwhile, raw sugar prices are hovering at a 7-month peak. Conversely, the metal market saw red, with several commodities declining due to strong profit-taking. At the close of trading, the MXV-Index remained nearly unchanged at 2,202 points.

Coffee prices continue to climb

At the close of yesterday's trading session, both coffee commodities increased for the third consecutive session. Most notably, Robusta coffee prices rose by 2.5%, reaching $ 5,446/ton, while Arabica prices also inched up by 0.5%, settling at $ 5,932/ton. The negative supply outlook from the two largest coffee-producing countries, Brazil and Vietnam, continues to drive price increases.

Hedgepoint Consulting estimates Brazil's 2024-2025 coffee production at 63 million bags, a reduction of 3 million bags compared to the previous crop; Vietnam's production is forecasted at 27 million bags, lower than previous projections. The firm predicts a global coffee deficit for the fourth consecutive year due to production declines in Vietnam and Brazil, with prices likely to remain supported by fundamental factors in the coming months.

Earlier, Brazil's National Supply Company (CONAB) had revised its coffee production forecast for 2024 by over 4 million bags, reducing the total to 54.79 million bags, 0.51% lower than 2023 and nearly 7% below earlier projections. Arabica production decreased by 2.52 million bags compared to the previous report, while Robusta production dropped by over 1.5 million bags to 15.2 million bags, 6% lower than last year.

The production drop in both countries is mainly due to weather issues, particularly prolonged heat during the flowering and fruit-setting stages. In Brazil, despite forecasts of rain, the amount of rainfall has been insufficient, leaving some areas dry. In Vietnam, while rainfall in recent months has improved crop yields compared to earlier in the year when drought was a concern, there are still worries about excessive rain caused by La Niña during the harvest period, which could further impact the market and support prices.

On the domestic market, as of this morning (September 26), coffee prices in the Central Highlands and southern provinces increased in line with global prices, now ranging from VND 120,500 to 121,100/kg, up by approximately VND 500/kg compared to yesterday.

Another noteworthy development in the industrial raw materials market is the 1.3% rise in raw sugar prices, reaching the highest level in seven months. The market continues to react to concerns over lower-than-expected supply in Brazil.

Profit-taking at high prices pushes metal prices down.

According to MXV, at the close of yesterday's trading session, 5 out of 10 metal products saw price declines, as red began to reappear on the metal price board following a previously strong trading session, primarily due to profit-taking by investors at high price levels. In the precious metals sector, silver weakened from a nearly four-month high, closing at $ 32.01/ounce after a drop of 1.27%. Conversely, platinum continued to rise, increasing by 0.4% to $ 991.7/ounce.

The precious metals market continues to benefit from the Federal Reserve's large-scale interest rate cuts. Experts forecast that silver, platinum, and gold prices will maintain an upward trend in the near future, supported by a low-interest-rate environment.

Additionally, rising geopolitical tensions are also supporting precious metal prices. The market is concerned about the potential for widespread violence in the Middle East as Israel intensifies attacks on the Hezbollah militia forces backed by Iran, with both sides exchanging missiles even as Israel continues its operations in Gaza.

However, silver prices still fell in yesterday's session primarily due to profit-taking by investors after prices surged to a nearly four-month peak.