COMMODITIES : Cocoa Prices Leap as Rumor of Deal Resurfaces

Prices of cocoa futures surged Monday on New York’s Coffee, Sugar & Cocoa Exchange on fresh rumors that the Ivory Coast and France had reached an agreement to withhold large amounts of Ivorian cocoa from the world market.

On other exchanges, precious metals futures fell again, grains and soybeans were mostly higher, livestock and meat were mostly lower, oil futures were mixed and stock index futures advanced.

Official word of a long-anticipated Ivorian cocoa withholding scheme appeared imminent Monday afternoon after a senior delegate to the International Cocoa Organization reportedly said parties had agreed on the framework for the deal.

Cocoa settled $30 to $48 higher, with the contract for delivery in December at $1,425 a metric ton.

But cocoa market analyst Arthur Stevenson of Prudential-Bache Securities Inc. cautioned that rumors of an Ivorian-Franco withholding scheme had been running rampant in the market and that nothing had been formally announced.

“That’s been the situation that we’ve heard every day now for two weeks, yet nothing changes,” Stevenson said. “Apparently something is in the works, but I can only tell you it has not been confirmed by the French government.”

Silver Prices Fall

Under terms of a deal reported by Knight-Ridder, 200,000 metric tons of Ivorian cocoa would be stored in Europe, 100,000 metric tons would be sold to the Soviet Union and 100,000 metric tons would be sold to the Paris-based trade house Sucre et Denrees for gradual release onto the market.

The total of 400,000 metric tons would represent more than half of the cocoa crop being harvested in the Ivory Coast, the world’s largest cocoa producer.

The Ivorians have been demanding exceptionally high premiums for their cocoa for more than a year in an attempt to bolster sagging prices worldwide, a problem caused by several years of surplus cocoa production.

Unable to sell much cocoa at its high asking price, the former French colony ran out of storage space for this year’s crop and appealed to the French government for assistance in withholding cocoa from the market.

Prices of silver futures tumbled for the fifth straight day on New York’s Commodity Exchange, reflecting slack investor demand and ample supplies.

The contract for December delivery fell to $5.98 an ounce during the session but bounced back to settle 5.5 cents below Friday’s close at $6.025, the lowest Comex silver price since March 26, 1987.

Other silver contracts lost as much as 6.9 cents on the day.

Turnaround in Soybeans

“I would say the next stop (or point of firm support) is somewhere between $5.50 and $5.60,” said Peter Cardillo, commodities trading adviser for Josephthal & Co., a New York brokerage firm.

Gold settled $1.60 to $1.90 lower, with December at $416.50 an ounce.

Soybean futures prices rebounded in afternoon trading to end sharply higher on the Chicago Board of Trade. Corn finished mostly higher, and wheat prices fell.

The turnaround in soybean prices followed steep daily declines in that market during six of the past seven trading sessions. Monday’s rally was attributed largely to profit taking by speculators who had sold contracts in earlier sessions in hopes of buying them back at lower prices, analysts said.

Wheat settled 0.75 cent to 2.75 cents lower, with December at $4.0825 a bushel; corn was 1.25 cents lower to 2.75 cents higher, with December at $2.61 a bushel; oats were 2.5 to 5.5 cents higher, with December at $2.06 a bushel, and soybeans were 1 cent to 15.25 cents higher, with January at $7.4625 a bushel.

Livestock and meat futures finished mostly lower on the Chicago Mercantile Exchange in uneventful trading before the Agriculture Department’s monthly cold-storage report.

The report, issued after the close, showed record-high frozen pork supplies as of Nov. 1 of 321 million pounds. The previous Nov. 1 record was 312.2 million pounds in 1971, analysts said.

Pork Belly Collapse Seen

The total included 49.6 million pounds of frozen pork bellies, the second-largest monthly pork belly stocks figure for any month on record.

The continued aggressive storage of pork bellies, which are sliced to make bacon, means prices eventually will collapse, said Thomas Morgan, president of Sterling Research in Arlington Heights, Ill.

Live cattle settled 0.30 cent lower to 0.20 cent higher, with December at 72.55 cents a pound; feeder cattle were 0.52 to 0.80 cent lower, with January at 81.45 cents a pound; hogs were 0.20 to 0.48 cent lower, with December at 39.85 cents a pound, and frozen pork bellies were 0.55 to 0.67 cent lower, with February at 42.40 cents a pound.

On the New York Mercantile Exchange, West Texas Intermediate crude oil settled 3 to 7 cents higher, with January at $12.98 a barrel; heating oil was 0.36 to 0.73 cent higher, with December at 43.47 cents a gallon, and unleaded gasoline was unchanged to 1.33 cents lower, with December at 44.32 cents a gallon.