COMMODITIES : Cocoa Futures Soar on Rumor of Deal by Ivory Coast

Prices of cocoa futures surged Wednesday on New York’s Coffee, Sugar & Cocoa Exchange on rumors that the Ivory Coast and France had reached an agreement to withhold a large amount of new-crop Ivorian cocoa beans from the world market.

On other exchanges, silver futures sagged but gold was little changed; copper futures retreated; stock index futures plunged; grains were lower; soybeans were higher, and livestock, meat and energy futures were mixed.

Rumors of an impending cocoa pact between France and the Ivory Coast have kept the cocoa market on edge for weeks. But Wednesday, the agreement was said to have been completed and an announcement was expected at any time.

Cocoa settled $35 to $59 higher, with the contract for delivery in December at $1,392 per ton. The rally erased all of the previous day’s sharp losses.

The Ivory Coast’s policy of withholding its prized cocoa from the market in an attempt to force prices higher hit a snag this fall when the West African nation ran short of storage space for its newly harvested crop, analysts said.

The former French colony appealed to the French government and has reportedly been negotiating for France’s cooperation on a new withholding plan.

“I would say they are very close to an agreement and may indeed have reached one today,” said Sandra Kaul, cocoa market analyst with Shearson Lehman Hutton Inc.

She said she did not know the details, but it was rumored that a large Paris-based trading house would buy a large quantity of Ivorian cocoa, which it would withhold from the world market by government command.

Analyst Kim Badenhop of Prudential-Bache Securities Inc. in New York said the amount to be withheld from the market was rumored to be 400,000 metric tons--slightly less than two-thirds of the Ivory Coast’s new crop.

“That’s taking a lot of cocoa off the market and the market’s been responding to that,” he said.

Silver futures slumped on New York’s Commodity Exchange after independent professional traders tried and failed to rally the price for March delivery up to $6.60 an ounce, said Bernard Savaiko, an analyst with Paine Webber Inc.

Gold was little changed despite the weakening of the dollar, a bullish cue for precious metals.

Gold settled unchanged to 40 cents higher, with December at $425.60 an ounce; silver was 9.3 cents lower across the board, with December at $6.30 an ounce.

Near-month copper futures finished lower for the fourth time in the past five sessions, but Savaiko said the selling was technically motivated and supply-demand factors remained bullish.

Copper settled 1.9 cents lower to 1.5 cents higher, with December at $1.28 a pound and the spot November contract at $1.35 a pound.

Stock index futures fell sharply on the Chicago Mercantile Exchange on fears that the Federal Reserve Board would respond to signs of rising inflation by raising interest rates, analysts said.

The contract for December delivery of the Standard & Poor’s 500 settled 4.45 points lower at 265.05.

Grain futures settled mostly lower while soybeans finished mostly higher on the Chicago Board of Trade in a quiet session that appeared to mark the end of the recent selling wave.

On the New York Mercantile Exchange, West Texas Intermediate crude oil settled unchanged to 32 cents lower, with December at $13.67 a barrel; heating oil was 0.01 cent lower to 0.09 cent higher, with December at 44.47 cents a gallon, and unleaded gasoline was 0.46 cent lower to 0.30 cent higher, with December at 46.50 cents a gallon.

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