Chocolate manufacturer Barry Callebaut does not expect repeat of cocoa crisis despite El Nino

Swiss chocolate maker Barry Callebaut does not expect a repeat of the cocoa market turmoil seen in 2023 and 2024, even if a strong El Nino weather pattern emerges in the coming months, its chief financial officer Peter Vanneste said on July 9.

The United Nations weather agency on July 3 raised its forecast for the rapid emergence of a strong El Nino – a meteorological phenomenon particularly risky for cocoa – in the coming months and warned that it is likely to drive global temperatures higher.

“In 2023/2024, El Nino coincided with the main crop and marked the third consecutive year of deficit. In contrast, today, we’re coming from a position of a strong surplus with ample cocoa stocks entering the new crop year,” Vanneste said.

He added that the firm, which supplies key chocolate players such as Nestle and Hershey, strengthened its resilience through origin diversification, increased sourcing flexibility and enhanced cocoa bean blending capabilities, as well as several financial measures.

During the call, Vanneste added that his firm is closely watching the data on cocoa grind, a proxy for chocolate demand, for the second quarter of the year.

The latest May data on cocoa grind rose 39.7 per cent year on year in Ivory Coast, the world’s biggest cocoa producer, which vies with the Netherlands for the leading spot for grinding.

“The expectation is that it will increase, but demand is going to take time to recover. So that’s something to keep an eye on.” REUTERS