Silver prices rose 9% last week, while coffee prices plummeted due to supply pressures.

Overview of the commodity market last week

According to the Vietnam Commodity Exchange (MXV), the commodity market last week saw distinctly contrasting movements. Precious metals, led by silver, continued to attract investment and set new price highs. Conversely, the coffee market faced strong selling pressure as major producing countries entered the peak harvest season.

Silver hits new high on expectations of Fed interest rate cut.

At the end of the trading week, the price of silver on the COMEX exchange reached$67.49 per ounce, up about 9% from the previous week and marking the fourth consecutive week of gains. The main driving force comes from expectations that the US Federal Reserve (FED) will soon ease monetary policy.

Recent US economic data reinforces this assessment. According to the Bureau of Labor Statistics (BLS), the consumer price index (CPI) in November increased by only 2.7% year-on-year, lower than the forecast of 3.1%. At the same time, the unemployment rate rose to 4.6%, the highest level in four years. These signs indicate that inflation is cooling and the labor market is slowing down, creating conditions for the Fed to potentially lower interest rates sooner than expected. When interest rates fall, the US dollar is likely to weaken, increasing the attractiveness of dollar-denominated assets such as silver.

In terms of supply and demand, the silver market continues to be supported by a persistent supply deficit and positive demand prospects from the green energy shift, particularly in solar power generation and electric vehicles. However, risks remain as the Chinese economy, which consumes approximately 40% of global industrial silver, shows signs of slowing down. Its industrial output in November increased by only 4.8%, the lowest level since August last year.

In the domestic market, the price of 999 silver as of December 20th also increased by approximately 2.3% compared to the previous week. In Hanoi, the price was listed at 2.13 - 2.16 million VND/ounce (buying price - selling price). In Ho Chi Minh City, the price fluctuated between 2.14 - 2.17 million VND/ounce.

Coffee prices plummet due to seasonal supply pressures.

In contrast to precious metals, industrial raw materials were in the red, with coffee being the focus. At the end of the week, Arabica coffee prices fell by nearly...7.8%The price dropped to $7,510/ton, while Robusta prices fell by more than8.3%, falling to $3,778 per ton.

The main reason is the significant increase in supply pressure as Vietnam, the world's largest producer of Robusta coffee, enters its peak harvest season. In just the first 15 days of December, Vietnam exported over 76,000 tons of coffee, a more than 50% increase compared to the same period last year. At the same time, other major growing regions such as Central America, Colombia, and Ethiopia are also entering their harvest seasons, contributing to an improvement in short-term supply.

Nevertheless, MXV believes that long-term factors still support coffee prices. Global coffee inventories remain low, and supply risks due to climate change persist. The current price correction, in the context of still tight underlying supply and demand, could lead to strong rebounds in the future.

In the Central Highlands, the harvesting progress for the new crop is estimated at 50-60%. Domestic coffee prices fluctuated around this level last week.90,000 VND/kgThe price has decreased by more than 12,000 VND/kg compared to last week due to selling pressure at the beginning of the season.