Traders started worrying about the next crop and the El Niño weather phenomenon, which tends to reduce cocoa yields in West Africa.

The ongoing El-Nino weather pattern is usually associated with good rains in South America but dry weather in Asia that could tighten supplies of the Robusta variety.

This also supports a narrowing of the Arabica-Robusta spread, which has dropped to an average of US¢36/lb in August compared to recent highs of around US¢100/lb in February.

In Latin America, particularly in countries like Brazil and Argentina, El Nino’s association with reduced rainfall during critical growing seasons contributed to lower yields for crops like corn, soybeans, and wheat.

He also points to two weather systems working together. First there is the ENSO, or the so-called El Niño Southern Oscillation, which indicates a change in climate from a warm wet system to a cool dry one, off South America’s equatorial coast. “Currently, we are in between the two,” he says.^{1) 2)}