Barry Callebaut warns El Niño could add thousands to cocoa prices
The chief of Barry Callebaut, one of the world's leading cocoa processors, said that El Niño weather conditions could push up cocoa bean prices by a few thousand pounds per metric tonne.
Image credit: Tetiana Bykovets on Unsplash
El Niño, a climate pattern that can raise temperatures and increase the risk of extreme weather, may reduce the yield of crops, including cocoa, limiting supply and pushing up prices.
Not as dramatic
However, the prices should not jump as dramatically as they have in the past couple of years, CEO Hein Schumacher said on a press call.
London cocoa futures are trading at £2,944 per tonne, down from more than £9,000 in April 2024.
"Usually by the end of June and July, you sort of know what (El Niño) is going to lead to," Schumacher said, pointing to much higher than normal rainfall in Ecuador and much higher temperatures in West Africa among the phenomena Barry was "very cautiously" observing.
The World Meteorological Organisation has said there is an 80% chance that an El Niño event will develop between June and August, and a 90% chance it will last until at least November.
El Niño naturally occurs every two to seven years, when weakening trade winds cause warming of surface waters in the eastern Pacific. This can lead to higher global temperatures and disrupted rainfall, meaning drought in some regions and heavy rains in others.
Schumacher, who became the CEO in January, said he expected the main impact from the Middle East war to be on fuel, which is Barry's main concern in terms of next year's overall costs.
"(Fuel) has a direct impact on our operations and an indirect impact on demand and so forth, and that's something that we need to look at to what extent we can offset that and want to offset that," he said.