What impact will the powerful natural phenomenon of El Niño have on the sugar and cacao market?

The predictions of the American bank Goldman Sachs about the price of cocoa beans and sugar were improved due to the natural phenomenon of El Niño, which caused unfavorable weather conditions.

Experts of the bank now predict an increase in the price of cocoa up to 3,200 dollars per ton (previously they talked about 3,000 dollars per ton). Bank experts believe that El Niño, the strongest for the last fifty years, will maintain market volatility for another several months. Since there are no other unfavorable conditions, they believe that the growth in global demand will not be sufficient to ensure a stable deficit on the cocoa market.

At the same time, Goldman Sachs, having analyzed the situation on the sugar market, said about the increased risks for deliveries (the short-term perspective is meant). Experts predicting a previous price of 13 cents per pound increased the prediction for the next three months to 14. At the same time, given the weakness of the Brazilian real, which should spur export of raw materials from the country, the prediction for the cost of sugar for 6 and 12 months was left on the mark of 13 cents.

Having analyzed the soybeans market, Goldman Sachs is guided by the probable growth of Brazilian supplies and predicts next year price of raw materials is 8.75 dollars per bushel.

Taking into account the stability of corn supplies, the Bank believes that its cost is unlikely to exceed 3.75 dollars per bushel in the coming year, so the total price increase is no more than 4 dollars.

In general, predictions of economists that take into account the abnormally high temperatures in America and Europe as well as increased aridity in Asia, do not involve increase in prices for agricultural products, suggesting pressure on energy quotes.

According to the forecast from the WMO (World Meteorological Organization), the strength of the weather phenomenon of El Niño, which can become one of the three strongest oscillations in the last 65 years, will not weaken by the end of the year.