Commodities - Cocoa soars, gold ends firm, oil lower

www.forbes.com Reuters, 01.27.03, 5:37 PM ET

NEW YORK (Reuters) - Cocoa prices jumped to the highest level in three months Monday as angry street protests in top exporter Ivory Coast fed more worries that world supplies will be disrupted this year. In other commodity trade, oil prices slid as the outlook for more weapons inspections in Iraq would likely delay a U.S.-led military assault there. Gold prices edged higher as Wall Street stocks fell and wheat plummeted on profit-taking.

At the New York Board of Trade, cocoa for March delivery closed $63 higher at $2,250 per metric ton, the highest closing price since Oct. 15.

Ivory Coast was plunged into crisis by a coup attempt on Sept. 19. The putsch failed, but ensuing civil war has left hundreds dead, displaced more than 1 million and split the country of 16 million along ethnic lines -- a rebel-held, largely Muslim north and a heavily Christian south.

On Monday, street protests in Ivory Coast for a third day over a peace deal with rebels were posing a serious threat to cocoa shipments and export loadings, industry sources said.

Gangs of youths, some armed with machetes, blocked streets in Abidjan in protest against the peace deal they saw as imposed by former colonial power France. Ivory Coast President Laurent Gbagbo urged the youths to remain calm after he agreed to a power-sharing accord that will bring the rebels into a coalition government.

Residents said the protests spread to key cocoa towns Monday, with demonstrators taking to the streets of San Pedro -- the country's main port for cocoa -- Gagnoa and Soubre.

"If trouble goes on, the ports will be inaccessible for cocoa trucks and the work force won't be at work," a leading exporter in Abidjan said. "We are all waiting to see what will happen during the day, but in any case nobody is at work.

Exporters also feared more troubles in the bush. Most cocoa workers in the west are from Burkina Faso or other Muslim neighbors, who are widely seen as sympathetic to the rebels.

"We have to expect more problems in the cocoa sector as local farmers accuse cocoa workers of financing the rebels with their cocoa beans," a leading San Pedro-based buyer said.

Ivory Coast usually accounts for 40 percent of world cocoa supplies each year to chocolate manufacturers.

At the New York Mercantile Exchange, crude oil prices fell 3 percent after United Nations arms inspectors offered little evidence that Iraq was hiding banned weapons.

U.N. Secretary General Kofi Annan then called for more time for inspectors to finish their job in Iraq.

March crude oil closed 99 cents lower at $32.29 a barrel, down about $3 from the 26-month of $35.20 high struck last week on fears of war in Iraq.

In London, March Brent crude oil fell 63 cents at $29.86. News that anti-government protesters in Venezuela were debating on a limited rollback of their disruptive 57-day-old general strike also weighed on crude oil and product prices.

NYMEX March gasoline fell 1.93 cents to 90.67 cents a gallon. March heating oil fell 1.85 cents a gallon to 88.87.

Hans Blix, chief U.N. arms inspector, reported to the U.N. Security Council on Monday after two months of inspections, detailing gaps in information that Iraq should have delivered by now. But he said those gaps could not lead him to conclude Baghdad possessed prohibited arms.

The White House said Blix's report showed Baghdad failed to comply with U.N. disarmament demands and warned the inspections process was "running out of time." On Sunday, Secretary of State Colin Powell said the United States was prepared to go to war against Iraq with or without its European allies.

Those sentiments also jostled the gold market, which closed below six-year highs set earlier in the day ahead of the Blix remarks. COMEX February gold closed $1.00 higher at $369.40 an ounce after reaching its highest level since November 1996.

Gold bullion in London was fixed at a six-year high in the morning at $370.80 but eased to $368.50 at the afternoon fix.

At the Chicago Board of Trade, dismal wheat export business sparked speculative profit-taking in wheat despite worries that bitter cold weather in the Plains and Midwest may have hurt some of the dormant winter wheat crop in recent days.

March wheat closed 8 cents lower at $3.10-1/2 a bushel.

"I haven't seen or heard anything other than technical fund selling that would do this," said analyst Lisa Wheeler at Cargill Investor Services. "Exports aren't good, but we've known that for quite a while. I think this was purely technical."

The U.S. Department of Agriculture on Monday said U.S. wheat inspected for export last week totaled less than 7 million bushels. Traders had expected 13 million to 17 million bushels.

March corn closed 1/2 cent lower at $2.35 a bushel and March soybeans closed 1-3/4 cents lower at $5.67-1/4.