El Niño Risk Lifts Cocoa as Ecuador Exports Shrink

Key Moments

Repricing Weather Risk Lifts Futures

Traders pushed cocoa prices sharply higher on Monday as markets reassessed the impact of a potentially powerful El Niño on future supply. The renewed rally is landing on an Ecuadorian export sector that has already seen nearly a billion dollars wiped from cocoa earnings in just four months.

In London, cocoa gained twelve percent to £4,222 a tonne, the highest level in eight months. New York cocoa rose thirteen percent to $5,694 a tonne, approaching $5,700.

Buying was driven by funds and investors covering short positions after forecasters increased the estimated probability of an unusually strong El Niño. The weather pattern is associated with heavy rainfall in West Africa and Ecuador, followed by hot, dry winds that damage cocoa trees and reduce yields.

Ecuador’s Cocoa Exports: Sharp Revenue and Volume Declines

Between January and April, Ecuador earned six hundred and sixty-eight million dollars from cocoa and related products, compared with one and a half billion dollars in the same period of 2025. The shortfall of nine hundred and fifty-five million dollars represents a fifty-nine percent contraction in export value, after a first quarter that was down sixty-three and a half percent. January was the weakest month in almost two years.

The slide reflects both price and volume effects. Cocoa prices had previously surged above twelve thousand dollars a tonne in December 2024, then stabilized between seven and eight thousand during 2025, before dropping to roughly three thousand three hundred in March. While this price retreat contributed heavily to the revenue loss, a sixteen percent decline in export volumes over the same four-month period shows Ecuador also shipped less cocoa in physical terms, independent of futures market pricing.

Climate, Not Demand, Seen Behind Volume Pressure

Merlyn Casanova, who heads the national cocoa exporters’ association, links the volume decline primarily to domestic production challenges driven by climate, rather than any weakening in international demand.

According to her assessment, the global market “remains eager to buy” while supply is extremely tight. She points out that Ivory Coast has already signaled an almost eleven percent drop in its 2025/26 output.

Export destination data is consistent with that story. Shipments to the United States fell sixty-one percent over the four months, and exports to the European Union were down sixty-seven percent. In contrast, sales to China and Russia doubled, though from a much smaller base.

These new buyers are far from filling the gap left by Ecuador’s traditional markets. China purchased six million dollars of cocoa over the period, and Russia ten million dollars, against close to one billion dollars of lost sales to long-standing customers.

Macroeconomic Exposure to El Niño

Citi Research recently identified Ecuador as the Latin American economy most vulnerable to the looming El Niño episode. Its analysts expect inflation to run more than two percentage points above trend over the subsequent twenty months.

The mechanism is direct: warmer Pacific waters drive coastal flooding, which damages domestic food production. That in turn pushes up prices and erodes export earnings in a dollarised economy that cannot offset the shock through currency depreciation.

Cocoa is exposed on multiple fronts. Excess moisture raises the incidence of black pod disease, while later heat and drought undermine flowering and weaken trees already under strain from previous seasons.

For market participants, the focus is on the next crop cycle rather than the current one. What happens now to rainfall patterns, flowering, and the development of small pods will determine how many beans are available several months from now.

Price Rally vs. Physical Availability

The resurgence in cocoa prices offers only partial relief to producers like Ecuador. The exchange price has rebounded about seventy percent from its March low, yet Ecuador has fewer tonnes available to benefit from that upswing.

Conditions at the farm level have held up better than headline futures might suggest. Growers currently receive around one hundred and eighty to one hundred and ninety dollars per hundredweight, significantly higher than the eighty to ninety dollars paid in late 2023.

Structurally, Ecuador’s cocoa sector retains important advantages. The country dominates the fine-flavor cocoa niche, which earns a quality premium, and more than seventy thousand growers have taken part in productivity programs that significantly raised yields.

The critical vulnerability now is the harvest itself. With cocoa established as Ecuador’s second-largest non-oil export, a poor flowering season at this stage would prove far more costly than a simple downturn in prices.