Weathering the Storm: El Niño’s Impact on Soft Commodities in 2023


As we bid farewell to 2023, the global market has witnessed a staggering rally in soft commodities, sending shockwaves through the futures contracts of orange juice, cocoa, coffee, and sugar. The driving force behind this surge? None other than the unpredictable whims of El Niño. In this article, we’ll delve into the meteorological intricacies influencing commodity markets and explore the impending repercussions on consumers.

El Niño’s Sweet Tooth: Unraveling the Sugar Surge

Soft commodities have become the focal point of a mammoth rally in 2023, with futures contracts on orange juice, cocoa, coffee, and sugar reaching unprecedented heights. The phenomenon of El Niño, a climate pattern characterized by a rise in sea temperatures in the eastern Pacific, has played a pivotal role in this surge. Carlos Mera, head of agri commodities market research at Rabobank, humorously notes, “El Niño has a sweet tooth because it sort of eats or takes away much of the sugar in the world.”

El Niño Unleashed: The Climatic Catalyst

El Niño, making a return in the early months of the year, is known for inducing extreme weather conditions, including storms and droughts. While its effects typically peak in December, the impact gradually disseminates across the globe, contributing to a complex web of supply concerns and market fluctuations.

Forecasting the Aftermath: Implications for Consumers

As the soft commodities market experiences unprecedented gains, consumers are bracing themselves for potential price hikes in the coming months. The effects have already trickled down to sugar prices, impacting global markets. Rabobank’s annual outlook for 2024 suggests that the El Niño-related dryness in Southeast Asia, India, Australia, and parts of Africa has propelled a rally in soft commodities like sugar, coffee, and cocoa.

Global Food Inflation: A Sharp Turnaround

Rabobank anticipates a sharp decline in global food price inflation after years of soaring prices. However, the bank also issues a warning about potential adverse effects on crops early next year due to El Niño, with some regions benefiting while others face challenges. The delicate balance of this climatic phenomenon could significantly shape the agricultural landscape in the near future.

Orange Juice, Cocoa, Coffee, and Sugar: Riding the Rollercoaster

The year 2023 witnessed unprecedented price surges in specific soft commodities. Orange juice futures soared by a remarkable 80%, reaching an all-time high in late November. Cocoa, a vital ingredient in chocolate production, experienced a 64% surge, attaining 46-year highs. Robusta coffee, a sought-after variety, hit its highest level in 15 years. Despite a 13% increase in sugar prices in 2023, they have tapered off since hitting a 12-year peak in September.

The Profit Potential Dilemma

Trader Dave Reiter of Reiter Capital Investments LLC expressed astonishment at the markets exceeding expectations. He highlighted the staggering profit potential, particularly in the orange juice market. However, he cautioned about an eventual crash, predicting it to be one for the record books.

El Niño’s Impact: Looking Ahead to 2024

Rabobank’s Carlos Mera emphasizes the “very clear” relationship between El Niño and higher sugar prices, particularly affecting major sugar-exporting countries. While cocoa prices have surged, Mera anticipates a delayed impact on consumers, as the cocoa industry’s forward-selling practices may temporarily shield chocolate lovers from immediate price hikes.

A Culinary Conundrum: Navigating Chocolate Price Surges

Despite cocoa’s significant price jump, the impact on consumers is not yet palpable. Mera underscores that chocolate prices are likely to rise in 2024 as the costs associated with El Niño are passed on to consumers.


The El Niño-induced rally in soft commodities has set the stage for a complex interplay of market dynamics. As consumers gear up for potential price fluctuations in their favorite commodities, the global market remains on alert, closely monitoring the climatic forces at play.

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