COMMODITIES : Coffee Futures Fall as Hopes for Tighter Supply Fade

Coffee futures prices tumbled Thursday on indications that an expected cut in export quotas would not cause a tightening of available supplies of unroasted beans, analysts said.

On other markets, prices for future delivery of oil, precious metals, livestock, meat, grains, soybeans and stock index futures all retreated.

Coffee traders on New York’s Coffee, Sugar & Cocoa Exchange had been worried that falling prices would trigger an automatic reduction in export quotas under the International Coffee Organization’s price-support system.

But the ICO announced Thursday that shipments from October through March were at their lowest level in six years, indicating that some producer countries had held back coffee and under-shipped their export quotas for the six-month period, said Sandra Kaul, an analyst in New York with Shearson Lehman Hutton Inc.

Under ICO rules, those countries will be required to make up the 2-million-bag difference during the second half of the ICO marketing year, “so supplies are going to be even larger than people had been anticipating,” Kaul said.

“Now people are no longer afraid that a quota cut would make supplies too tight,” she said. “Even with a quota cut, supplies are going to be pretty plentiful this quarter.”

With the new supply outlook, U.S. roasters curtailed their buying of coffee futures and prices fell rapidly, she said. The active contract, for delivery in July, tumbled 1.48 cents, settling at $1.328 a pound.

Oil Futures Slump

Crude oil futures drifted lower throughout the day on the New York Mercantile Exchange, then dropped below $18 a barrel near the close as the market registered doubt that OPEC members would agree to reduce their crude oil exports.

Representatives of the Organization of Petroleum Exporting Countries began meeting Thursday afternoon in Vienna on a proposal to cut their exports by 5% in an attempt to boost prices.

Six independent oil-producing nations have agreed to reduce their exports by 5% if OPEC will do likewise.

“The market has decided it’s going to be disappointed regardless of what happens at the OPEC meetings,” said Bob Baker, an analyst in New York for Prudential-Bache Securities Inc.

West Texas Intermediate crude oil settled 19 cents to 29 cents lower, with June at $17.98 a barrel; heating oil was 0.69 cent to 0.80 cent lower, with May at 50.97 cents a gallon, and unleaded gasoline was 0.53 cent to 0.85 cent lower, with May at 51.83 cents a gallon.

Gold and silver futures retreated on the Commodity Exchange in New York in reaction to the slide in oil futures, analysts said.

Gold settled $1.70 lower across the board, with June at $452.60 an ounce; silver was 2.5 cents to 3.4 cents lower, with May at $6.466 an ounce.

Cattle futures prices sank on the Chicago Mercantile Exchange in a delayed reaction to last week’s government reports showing larger-than-expected numbers of cattle being fattened for slaughter.

Cattle futures had risen the previous two days on strong cash markets but “I think the reality of the report is taking hold,” said Tom Morgan, president of Sterling Research Corp. of Arlington Heights, Ill. “It shows a lot more cattle to be marketed in May and June.”

Cattle Prices Ease

Heavy movement of hogs to market pressured hog and pork belly futures, he said.

Live cattle settled 0.67 cent lower to 0.45 cent higher, with June at 70.90 cents a pound; feeder cattle were 0.05 cent to 0.30 cent lower, with April at 80.65 cents a pound; hogs were 0.02 cent to 0.50 cent lower, with June at 48.90 cents a pound, and frozen pork bellies were 0.32 cent to 1.20 cents lower, with May at 51.47 cents a pound.

Grain and soybean futures closed mostly lower on the Chicago Board of Trade as the outlook for crop planting and winter wheat harvesting improved.

Six-to-10 day forecasts by the National Weather Service and private forecasters called for dry weather for planting of corn and soybeans in the Corn Belt early next week followed by rain, which will benefit crops already planted, especially oats and spring wheat, analysts said.

The weather forecasts also were favorable for the winter wheat harvest, which is under way in Texas, said Walter Spilka, an analyst in New York with Smith Barney, Harris Upham & Co.

Wheat settled 3.5 cents to 4 cents lower, with May at $3.065 a bushel; corn was 0.50 cent to 1.5 cents lower, with May at $2.0025 a bushel; oats were 3.25 cents to 6 cents lower, with May at $1.61 a bushel, and soybeans were 3.5 cents lower to 0.25 cent higher, with May at $6.758 a bushel.

Stock index futures retreated on the Chicago Mercantile Exchange, where the contract for June delivery of the Standard & Poor’s 500 index settled 0.60 point lower at 263.40.

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