Cocoa prices rose on Monday at the Coffee, Sugar & Cocoa Exchange after the International Cocoa Organization forged an agreement over the weekend to support prices by reactivating a buffer stock to take excess supplies off the market.
March delivery cocoa settled $19 higher at $1,902 a ton in New York, reflecting gains in London cocoa futures.
But prices failed to break out of a relatively narrow range of trading as some dealers already discounted the long-anticipated agreement. Others were unconvinced that buying for the buffer stock would begin soon. After trading, the ICCO announced that it would tender today for 4,000 tons of cocoa beans for the buffer.
Although sources agreed that the decision to reactivate the buffer stock by buying from producers or dealers would lift prices in the short term, opinions differed about its effectiveness in combating existing oversupply in the long run.
On other markets, copper futures advanced sharply; precious metals moved higher; energy futures rose; grains and soybeans were mixed, and stock index futures advanced.