Weather remains on the cocoa market’s radar

Cocoa futures closed the week of April 10 at 3,246 USD/t in New York and 2,423 GBP/t in London. With no significant changes in fundamentals, the most recent market movements have been driven mainly by technical factors and the macroeconomic outlook, given the developments in the conflict between the US and Iran. Although the trend remains bearish, the cocoa market remains structurally sensitive, such that any shift in perception contributes to volatility.

In this context, the weather remains among the market’s key points of focus. More favorable weather conditions, especially regarding cumulative rainfall, are among the factors supporting the partial recovery of production in West Africa, the main cocoa-producing region. To date, Ivory Coast and Ghana have recorded cumulative rainfall in the current cycle above that observed in the same period of the previous crop year and close to the historical average. Combined with the expected reduction in grinding, this situation reinforces the outlook for a surplus in the 2025/26 season.

Nevertheless, given the characteristics of cocoa fruit development, a good amount of rainfall in the coming weeks remains important for the fruits that are still forming and will be harvested by the end of the mid-crop. Additionally, April and May correspond to the main flowering period that will give rise to the fruits of the 26/27 main crop, so favorable weather conditions will be important in determining both the volume and quality of the start of the next crop. In the short term, although weather forecasts involve some degree of uncertainty, models suggest that some areas of Ivory Coast may experience below-average rainfall over the next 14 days, which remains a point of concern for the market.

In the medium and long term, the weather also remains on the cocoa market’s radar. Statistical models point to the end of La Niña in 2026 and indicate an increased probability of an El Niño event beginning between May and July. The phenomenon tends to change global weather patterns, increasing the risk of drought, excessive rainfall, heat waves, and changes in storm and hurricane activity in key commodity-producing regions.

Regarding cocoa's main producing regions, the potential effects of El Niño vary depending on its intensity and the specific location analyzed. The phenomenon may lead to drier conditions in West and Central Africa, Central America, and northern Brazil, while simultaneously increasing rainfall in Peru, Ecuador, and parts of Africa. Regarding temperature, heat waves may occur more frequently in South America and Africa, among other regions. It is worth noting that, in some regions, especially in West Africa, the weather response to El Niño is not always direct and may be influenced by regional events.

When examining the last three seasons during which El Niño occurred, cumulative precipitation in the main cocoa-producing regions does not indicate a single pattern across the origins analyzed. The results observed in Ivory Coast, Ghana, and Ecuador show that the phenomenon’s impacts on rainfall appear to depend on the event’s intensity, regional characteristics, and how precipitation is distributed throughout the season, rather than on a simple, generalized relationship with El Niño.

On the other hand, temperature data indicate a more consistent pattern. In recent El Niño-affected crops, Ivory Coast, Ghana, and Ecuador recorded, at different times, above-average temperatures, with the highest occurrence during the main flowering period (April - June). This behavior can intensify crop stress, especially when combined with reduced water availability.

Furthermore, production response to the phenomenon does not appear to follow a single pattern, especially since it is a perennial crop. Some analyses suggests that production may react in a nonlinear and time-delayed manner, with losses in the current season of the event and possible positive effects in subsequent crops. This behavior may be related both to the reallocation of resources by the plants and to the phenomenon’s effects on rainfall distribution throughout the production cycle.

In this regard, production data suggest that, in some seasons, there was a recovery in the cycles following the events, consistent with the hypothesis of lagged effects of the phenomenon on the crop. Nevertheless, this pattern is not uniform across countries and seasons, reinforcing the notion that the yield response to El Niño likely depends on the interaction between local climate, the phenological calendar, and the specific agronomic conditions of each region.

In general, El Niño tends to be associated with lower crop yields, as it leads to higher temperatures and, in certain contexts, also increases rainfall variability. However, its effects on cocoa do not follow a single pattern. The magnitude of the impacts depends on the intensity of the phenomenon, the timing of its occurrence throughout the crop cycle, and its interactions with critical phases of crop development, such as flowering and fruit development. Thus, the final effect on production can vary significantly between origins and seasons.

Cocoa futures continued to fluctuate mainly due to technical factors and the macroeconomic environment, in a market that remains sensitive and volatile. At the same time, the weather remains a point of focus, as more favorable rainfall conditions in West Africa have been supporting a partial recovery in production and reinforcing the outlook for a surplus in 25/26. However, the market remains vigilant in the short term, given the risk of below-average rainfall in parts of Ivory Coast, and in the medium and long term, with the increasing likelihood of an El Niño event. Although the phenomenon’s effects on rainfall do not show a uniform pattern across the origins analyzed, temperature data show a more consistent trend of above-average values, especially during the flowering period. Additionally, studies suggest that the impacts of El Niño on cocoa production may vary and be time-lagged, depending on the event’s intensity, the timing of its occurrence, and the specific conditions of each origin.