Cocoa futures prices plunged sharply Monday, reacting to the weekend collapse of international price control negotiations in London.
On other markets, energy futures were sharply lower; soybean, grain, livestock and meat futures were mostly higher, and precious metals were lower.
The negotiations involving the International Cocoa Organization pitted producing against consuming countries on details governing purchases of cocoa for the buffer stock, which is maintained by the group to keep surplus stock off the market.
Buffer stock buying has been suspended since mid-May, and this was the third attempt since then to get an agreement on restarting the operation.
"But the producers made too many demands and the consumers wouldn't go along," said Kim Badenhop, an analyst with Merrill Lynch Futures in New York.
With the collapse of the talks, prices on most cocoa contracts traded at the Coffee, Sugar & Cocoa Exchange in New York plunged below the $88-a-ton limit allowed for daily trading. The two nearby contracts, which trade without limits, dropped $144 and $147 a ton.
The December contract settled at $1,748 a ton.
"The contracts that were knocked limit-down will probably go down again tomorrow (Tuesday)," Badenhop said.
The inability to reach a cocoa price stabilization agreement leaves the buffer stock operations paralyzed at least until Feb. 29, when the international organization meets again.
Meanwhile, the cocoa market is looking at the fourth consecutive year of surplus production.
Energy futures dropped sharply on the New York Mercantile Exchange.
Worried About OPEC
Wholesale heating oil and gasoline were particularly weak.
"They really got hammered," said Andrew Lebow, an analyst with Shearson Lehman Bros. in New York. "The traders are a little pessimistic about the ability of OPEC to come to a meaningful production agreement."
Members of the 13-nation Organization of Petroleum Exporting Countries meet on oil production and price policy beginning Wednesday in Vienna.
The market is "worried that the schism between Iran and Saudi Arabia is going to prevent any workable agreement," Lebow said.
West Texas Intermediate crude oil settled 13 cents to 49 cents lower, with the January contract at $18.25 a barrel; heating oil was 1.08 cents to 1.33 cents lower, with January at 54.93 cents a gallon, and unleaded gasoline was 1.09 cents to 1.11 cents lower, with January at 46.84 cents a gallon.
Most soybean and corn futures contracts rose slightly, while wheat futures were mostly weaker on the Chicago Board of Trade.
Crop Production Rules
"Soybeans got a little support from soy oil on ideas that India might be buying some oil," said Joel Karlin, an analyst in Chicago with Research Department Inc.
However, the far-month soybean contracts closed lower, reflecting talk that government programs could be changed.
Karlin said some traders believe that crop production rules could be changed to allow soybeans to be planted on some set-aside acreage.
Wheat settled 2 cents lower to 1 cent higher, with December at $3.0725 a bushel; corn was 0.50 cent to 1.25 cents higher, with December at $1.85 a bushel; oats were 1.50 cents lower to 0.50 cent higher.
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