Cocoa Prices Fall to Seven-Year Low
Aug. 26, 1988
LONDON (AP) _ The price of cocoa on the London market dropped to its lowest level in seven years Friday.
In morning dealings, cocoa beans for December delivery changed hands at 831 pounds ($1,404) per metric ton, a loss of 24 pounds ($40) on last night's close and the lowest price for cocoa since June 1981, traders said. A metric ton is equivalent to 2,204.62 pounds.
The market's weakness reflects the prospect that 1988-89, which runs between October and September, could be the fifth consecutive season of overproduction, the sources added.
Hopes are also dwindling that International Cocoa Organization producer and consumer member countries can settle differences and open the way for new price-support measures.
The two sides meet here next month to discuss a possible stockpiling scheme, but its introduction depends on agreement on the minimum price that should be defended and payment by producers of arrears to the organization, industry sources said.
Crop prospects in West Africa and the Far East are said to be better than at this time last year, when drought was causing some concern, and another record crop is therefore in prospect for 1988-89.
Latest figures from the International Cocoa Organization and private traders indicate that the current 1988-87 crop will reach an all-time high of more than 2 million metric tons.
Many countries, including the Ivory Coast, Brazil, Malaysia and Indonesia, are expecting record 1987-88 production figures.
Traders said that the Ivory Coast - the world's biggest cocoa producer - could harvest an even bigger crop in 1988-89 than this season's estimated 630,000 to 645,000 tons.
Such a prospect would increase pressure on the country's cocoa marketing authorities to relax their present reserve selling strategy.
Since April, the Ivory Coast has been refusing offers under 1,300 per ton for its high-quality cocoa, Ivorian officials said.
This has pushed up the price for best quality beans generally, but there is a big surplus of poorer quality cocoa that is depressing the London market, traders said.