COMMODITIES : Price Support Pact Shaky--Cocoa Skids

Cocoa futures prices tumbled to a 12-year low Wednesday on New York’s Coffee, Sugar & Cocoa Exchange after an official of the world’s top cocoa-producing country said an international price support agreement was dying.

On other markets, pork futures fell sharply; crop futures gained; precious metals were higher; energy futures were lower, and stock index futures retreated.

The shaky price support agreement of the International Cocoa Organization sustained a big blow Wednesday when Denis Bra Kanon, agriculture minister of the Ivory Coast, told representatives of other producer nations he did not believe ICCO would survive, analysts said.

The Ivory Coast, which produced 29% of the world’s cocoa last year, has been withholding its cocoa beans from the market in hopes of selling them for higher prices.

The Ivory Coast also owes about $48 million in cocoa levy fees to ICCO to support its operations.

Bra Kanon’s remarks Wednesday to a meeting of the Cocoa Producers Alliance in Togo, had a profound impact on the cocoa market, which had been looking forward to ICCO’s scheduled two-week meeting beginning Sept. 5 in London. At that meeting, consumer and producer nations are to begin negotiations toward a new international cocoa price support agreement.

“A lot of people who may have believed the price of cocoa might rally because of the upcoming meeting were very demoralized,” said Arthur Stevenson, cocoa market analyst with Prudential-Bache Securities Inc. in New York.

Because of the reluctance of the Ivory Coast and other producers to pay levies, “the ICCO is facing very, very severe financial problems,” he said. “How are they going to enforce economic provisions to support prices if they don’t have the cash to keep going?”

In addition to those factors, a glut of cocoa is expected in the upcoming marketing year, which begins Oct. 1.

Cocoa settled $44 to $60 lower, with the contract for delivery in September at $1,220 per metric ton.

Frozen pork belly futures plunged the permitted 2-cent-a-pound limit on the Chicago Mercantile Exchange in a third day of sharp declines in the pork complex.

Hog slaughters are increasing on a seasonal basis, and the movement of hogs to market is being accelerated by the earlier than normal maturation of corn and soybean crops, analysts said.

“I have a feeling that producers are getting their pens cleaned up and getting ready to turn their attention to the harvest here pretty quick,” said Dale Durchholz, an analyst with Agri-Visor Services Inc. in Bloomington, Ill.

Most cattle futures moved lower on signs of slackening demand for beef, he said.

Live cattle were unchanged to 0.63 cent lower, with October at 71.77 cents a pound; feeder cattle were 0.22 cent lower to 0.10 cent higher, with September at 81.70 cents a pound; hogs were 0.48 cent to 0.95 cent lower, with October at 38.55 cents a pound; frozen pork bellies were 1.42 cents to 2 cents lower, with February at 48.90 cents a pound.

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