COMMODITIES : Coffee Plummets on News of Discord at Price Pact Meeting

Coffee futures prices plummeted Monday as reports of discord at the London meeting of the International Coffee Organization reached traders on the floor of the Coffee, Sugar & Cocoa Exchange in New York.

On other exchanges, copper, gold, silver, oil and pork futures rose; cattle, grains and soybeans were mixed, and stock index futures advanced.

A weeklong meeting of the 74 nation-members of the International Coffee Organization opened on a sour note with the producer countries divided on their goals and the United States, the largest of the consumer members, threatening to withdraw from the ICO unless it becomes more responsive to the marketplace.

U.S. representative Allan Wallis, the undersecretary of state for economic affairs, said U.S. participation in the next International Coffee agreement was “in jeopardy” because of the problems of the two-tier coffee market and the tight availability of the mild arabica coffee beans favored by American coffee drinkers.

A two-tier market has been created by the willingness of coffee producers to sell coffee beans at a discount to countries that are not ICO members, said Arthur Stevenson, an analyst with Prudential-Bache Securities Inc. in New York.

Although the European Economic Community and other Northern Hemisphere nations belong to the ICO, the United States’ absence from a new agreement “would likely be seen as a death blow to the agreement’s effectiveness,” Stevenson said.

That prospect prompted heavy selling of coffee futures in New York. Coffee settled 0.89 cent to 1.52 cents lower, with the contract for delivery in December at $1.2727 a pound.

The London meeting is the second to be held this year to conduct preliminary negotiations toward a new coffee agreement. The current pact expires next Sept. 30.

Despite his complaints, Wallis expressed confidence that the negotiations could produce a satisfactory compromise. And Stevenson noted that bargaining was at an early stage.

“We cannot realistically expect the boys in London to wrap up everything this week,” he said.

Prices of copper futures advanced slightly on New York’s Commodity Exchange after both the Comex and the London Metal Exchange reported drawdowns last week in their warehouse stocks of the metal.

Copper prices declined last week after touching a new record high of $1.538 for spot delivery. But Fred Demler, metals economist with Drexel Burnham Lambert Inc. in New York, said the market appeared to be consolidating before moving higher.

Gold and silver futures advanced on the Comex, mainly in response to a gain in energy prices, Demler said.

Cattle futures ended mixed to lower on the Chicago Mercantile Exchange after a late selling flurry erased earlier gains. Analysts linked the selling to light movement of boxed beef at lower prices and concern that the live cattle market had also slowed.

Pork futures gained slightly due to higher cash prices following light weekend marketings.