Speaking at the International Cocoa Organization’s (ICCO’s) recent cocoa market outlook conference in September in London, Dr Edward George, Head of Group Research at Ecobank, told delegates that it was not clear that El Niño would definitely have an effect on cocoa or, if it did, what sort of effect it might have.
As he noted, after a record crop in 2014/15, West Africa’s output is forecast to fall in 2015/16. “Côte d’Ivoire will lead the fall, while Ghana will regain ground lost in 2014/15. Nigeria & Cameroon will struggle to boost output, remaining bit players for now,” he said.
“Côte d’Ivoire is on track for a record crop in 2014/15, potentially reaching 1.8 million tonnes, but erratic weather, the cyclical downturn and potential impact of El Niño are expected to cut the crop by 100,000 tonnes in 2015/16, producing a total crop of around 1.65 million tonnes,” Dr George said, noting that Ghana’s cocoa crop totalled 700,000 tonnes in 2014/15, 23 per cent down on the previous season. A rebound is likely in 2014/15, but its strength could be constrained by the same structural and cyclical factors that caused last season’s downturn. “El Niño is coming but its impact on cocoa could be waning,” Dr George declared.
Historically El Niño has been associated with a decline in West African production. During the strong El Niños of 1965-66, 1972-73 and 1982-83, the crop fell sharply, both during the affected season and in the following two seasons.” “However,” said Dr George, “during the last two strong El Niños (1997-98 and 2009-10) production was broadly flat and has been followed by a surge the next two seasons”.
He said the key factor will be El Niño’s impact on the seasonal Harmattan, which affects both the second half of the main crop and the development of the mid-crop. Analysts agree that it is the mid-crop that has usually borne the brunt of any El Niño-related effects and it is too early to assess its impact on the mid-crop yet. “The weather phenomenon is the strongest since 1997/98 and it hangs as a major risk over this season, even if its impact on the crop is uncertain,” Dr George concluded.