WORLD COMMODITY PRICES LIKELY TO REMAIN LOW, UN UNIT SAYS

WORLD COMMODITY PRICES LIKELY TO REMAIN LOW, UN UNIT SAYS

World commodity prices are likely to stay depressed throughout the 1990s unless effective international action is taken to boost them, a senior U.N. agency official said.

''All price projections, including that of the World Bank, . . . show that if current tendencies are maintained, the real price of (commodity) products in the year 2000 will be 65 percent of what it was at the end of the 1970s," said Carlos Fortin, deputy to the secretary-general of the U.N. Conference on Trade and Development.Mr. Fortin said the agency wants to see commodity producers strengthen cooperation to better balance supply and demand, and it wants producers to consider diversification to reduce their dependence on single products.

He said the organization, which is holding its eighth conference in this Caribbean resort city, is also studying the use of market mechanisms such as hedging and swaps to limit risk for commodity producers.

Unctad's Common Fund for Commodities is considering a proposal from the World Bank to use some of the fund's resources to underwrite hedging by producers in the commodity markets, Mr. Fortin said.

But Mr. Fortin said he thought the World Bank plan faced a basic problem.

"Sovereign risk is very hard to insure," he said. "The premiums would be exorbitant."

The fund would face the risk, he said, that a country would simply renege on its commitment if it found it was locked into a below-market price.

Commodity producers could, however, help themselves by sharing information about plans to expand production to avoid the risk of gluts that depress prices, Mr. Fortin added.

The Common Fund was originally conceived as a way to help support international commodity agreements, but their collapse in recent years has left the fund searching for a new role.

Mr. Fortin conceded that the international climate does not now favor commodity pacts, but he said one of the most prominent - an international coffee agreement - would be resurrected in the coming months.

He rejected calls by some member states to scrap the Common Fund.

"In the next few months, a period of reflection will be necessary within the fund and by the fund's friends," Mr. Fortin said.