Takeaway

The presenter argues that despite a well-supplied 2025/26 season, the new cocoa crop year faces significant bullish weather risk. A strong El Niño is forecast to intensify the Harmattan winds from November, which historically reduces precipitation and threatens West African production volumes. This dynamic, combined with initial Ivory Coast arrivals running 45% behind last year, justifies a stronger risk premium in the market.

What the presenter said

• A strong El Niño is predicted to continue until at least May of next year. [00:33]
• The 2025-2026 cocoa harvest was very good, with an estimated surplus of around 400,000 tons. [01:21]
• The first weekly cocoa arrivals from Ivory Coast for the new harvest are already 45% below last year's level. [01:47]
• The initial weeks of the new harvest are expected to be slow due to torrential rains in June. [01:57]
• Issues with farmgate prices in Ivory Coast and Ghana may also delay the harvest. [02:10]
• The Harmattan phenomenon, which brings hot and dry winds from the Sahara, usually intensifies between November and March. [03:09]
• El Niño years historically see a stronger Harmattan, which could harm cocoa volumes, particularly the intermediate crop. [03:35]
• A study shows that during El Niño episodes, West Africa tends to have lower precipitation rates from November onwards. [05:05]

Trade ideas

• None stated. The presenter did not put forward an actionable trade but summarized the market view as justifying a stronger risk premium based on weather concerns.

Levels and data cited

• NOAA: Forecasts a "strong El Niño" to last until May of next year.
• Ivory Coast: Weekly cocoa arrivals for the first week of the current harvest were "45% below last year".
• StoneX Market Intelligence: A study shows a historical tendency for "lower precipitation rates in West Africa from November onwards" during El Niño episodes.

Risks and what would invalidate this

• A strong El Niño leading to adverse, dry weather conditions.
• Intensified Harmattan winds from November through March.
• Delayed harvest due to farmgate price issues in Ivory Coast and Ghana.
• Reduced cocoa volumes, especially for the intermediate crop, due to poor weather.