Cocoa Prices Fall to 12-Year Low

Cocoa prices tumbled to their lowest in 12 1/2 years Friday when producer and consuming nations seemed unable to agree on measures to deal with a glut.

“I am still hoping for a solution but am not very optimistic,” said Albert Russchen, chairman of the International Cocoa Organization.

After two weeks of talks, the organization of 17 producer and 20 consuming nations was still struggling to reach an agreement on what price to defend.

“It looks like Death Row for the talks. The market thinks this is inevitable but is waiting to see it in black and white,” one trader said.

Such major Third World debtors as Brazil and Ivory Coast are cocoa producers. The glut largely results from increased plantings and a saturated market in the affluent world, where filled, rather than solid chocolate bars, have gained popularity.

A four-year producer struggle against an oversupplied market entered a crisis in March when the organization had purchased its limit of 250,000 metric tons in a bid to keep supplies down and increase prices.

A second line of defense--a plan to take 120,000 tons more off the market by agreed withholdings of supply--is blocked in the absence of agreement on a target price.

Futures prices at midday in London went as low as 762 pounds ($1,275) a ton before closing at 764 pounds ($1,280).

Traders said that prices would be influenced by the Ivory Coast sales policy.