The global commodity market is currently offering favorable conditions for Vietnam’s manufacturing and import-export industries. However, to ensure stability and sustainability, it is crucial to promptly implement analysis, forecasting, and price hedging for key products such as agricultural goods, coffee, and rubber.
Raw material prices experience significant fluctuations. According to data from the Vietnam Commodity Exchange (MXV), the MXV-Index closed at 2,231 points on May 9, 2023, marking a 9% decrease since the beginning of the year. This index reflects the overall volatility of 31 interconnected commodities traded worldwide.
The largest contributors to this decline are agricultural and energy commodities. The MXV-Index for agricultural goods and energy respectively dropped by 13% and 17% compared to the end of 2022.
WTI crude oil remains the most heavily traded commodity globally, including in Vietnam, during the first four months of the year. The WTI crude oil price on the NYMEX Exchange remained relatively stable at $73.7 per barrel on May 9, 2023, compared to the end of 2022.
However, oil prices have exhibited unusual fluctuations in the past four months. After hitting a low of $64.36 per barrel on March 20, 2023, the WTI crude oil price surged by 30% to reach a peak of $83.38 per barrel on April 12, 2023. This marked the highest level of WTI crude oil prices so far this year. Subsequently, prices steadily declined, reaching a new low for 2023 at $63.57 per barrel on May 4, 2023, representing a 23% decrease from the peak.
- Contrary to the downward trend in many essential commodities, Robusta coffee prices have increased by 35% since the end of 2022 and are currently trading at around $2,465 per ton.
Pham Quang Anh, Director of the Vietnam Commodity News Center, explained: “Since the beginning of 2023, unfavorable information regarding harvests and supply sources, especially in key production regions like Vietnam, Brazil, and Indonesia, has led to a significant increase in Robusta coffee prices on both spot markets and the ICE Exchange.”
Vietnamese businesses benefiting from market fluctuations
Overall, the fluctuations in commodity prices during the first four months of the year have provided favorable conditions for Vietnamese import-export businesses.
For example, the animal feed manufacturing industry has greatly benefited from reduced prices of agricultural commodities on the Chicago Exchange, combined with decreased transportation costs, leading to a significant drop in import prices compared to the end of the previous year. Imported corn prices to ports like Cai Lan and Cai Mep have decreased to below $270 per ton, significantly lower than the prices exceeding $330 per ton earlier in the year. The drop in raw material prices has allowed animal feed manufacturers to consistently lower the prices of finished feed products by 300-800 Vietnamese dong per kilogram, facilitating favorable livestock production operations.
The favorable raw material prices have resulted in a sharp increase in imported animal feed ingredients to Vietnam from January to April. According to the report from the Vietnam Customs, the country imported 281 million tons of corn during the first four months of the year, a 9.3% increase compared to the same period in 2022. Imports of wheat and soybeans also increased by 6.
Imports of wheat and soybeans also increased by 6.4% and 12.1%, respectively, during the same period. This surge in imports reflects the growing demand for feed ingredients and the competitive advantage gained from lower commodity prices.
Furthermore, the fluctuating prices of agricultural commodities have had a positive impact on Vietnam’s export sector. Vietnamese agricultural products, including rice, coffee, and seafood, have become more competitive in international markets due to their relatively lower prices compared to other exporting countries.
Vietnam is one of the world’s largest rice exporters, and the decrease in global rice prices has opened up opportunities for the country to expand its market share. In the first four months of 2023, Vietnam exported approximately 2.3 million tons of rice, generating revenue of $1.1 billion, a 4.6% increase in volume and a 9.4% increase in value compared to the same period in 2022.
Coffee is another key export product for Vietnam. Despite the challenges posed by climate change and the impact of COVID-19, Vietnamese coffee exports have shown resilience. The increase in global coffee prices, particularly for Robusta coffee, has benefited Vietnamese coffee producers. In the first four months of 2023, Vietnam exported 600,000 tons of coffee, generating revenue of $1.4 billion, a 5.5% increase in volume and a 45% increase in value compared to the same period in 2022.
The rubber industry is also capitalizing on the favorable commodity prices. Rubber prices have been on an upward trend since the end of 2022 due to increased global demand and supply constraints. This has created a positive environment for Vietnamese rubber producers and exporters. In the first four months of 2023, Vietnam exported 360,000 tons of rubber, generating revenue of $567 million, a 27% increase in volume and a 67% increase in value compared to the same period in 2022.
As global commodity prices continue to fluctuate, Vietnamese businesses need to closely monitor market trends and adapt their strategies accordingly. While the current conditions provide temporary advantages, it is essential to develop long-term strategies that ensure stability and mitigate risks associated with price volatility.
To further explore market insights and trade opportunities, several international conferences and trade fairs are scheduled to take place in Vietnam. These events bring together industry experts, businesses, and policymakers to discuss trends, share knowledge, and foster collaborations. Participating in these events can provide valuable information and networking opportunities for Vietnamese businesses looking to leverage the current commodity market conditions.
In conclusion, the fluctuating global commodity prices have temporarily benefited Vietnamese businesses in the manufacturing and import-export sectors. Lower prices of agricultural commodities have reduced production costs and made Vietnamese products more competitive in international markets. However, it is crucial for businesses to remain vigilant, analyze market trends, and develop robust strategies to ensure long-term stability and sustainability in the face of evolving commodity prices.