Hershey CEO attributes cocoa rally to ‘El Niño speculation’
Moreton Capital Partners, an agricultural commodities hedge fund led by Australian trader Les Finemore, is raising between $300 million and $400 million from institutional backers for a vehicle that bets specifically on El Niño-driven price moves, The Wall Street Journal reported Thursday.
Finemore, who runs the firm from Mexico City, told the Journal that he has missed the beginning of the weather window and that the original fundraising target was higher and the timeline tighter. The global temperature spike driven by El Niño is not expected to peak until 2027, he said, leaving a trading runway if the coming months deliver poor harvests and strong returns.
“It’s a bit of a leader from a marketing standpoint, and also a great trading opportunity,” Finemore said of the El Niño fund.
El Niño carries branding power that other large-scale climate patterns lack, the Journal reported. The phenomenon links snowfall in Chile to drought in Papua New Guinea and floods in Texas to Antarctic sea ice, giving it a global profile that the Madden-Julian Oscillation, the Southern Annular Mode and the Atlantic Multidecadal Variability do not enjoy.
Cocoa futures have climbed in recent weeks on fears that the months ahead could resemble the 2023–2024 El Niño, which the Journal reported was blamed for chocolate-price inflation after floods followed by dry winds devastated cocoa harvests in Ivory Coast and Ghana. Hershey Chief Executive Kirk Tanner said on an earnings call last month that he blames “El Niño speculation” for the rally.
“We do not expect cocoa to remain at current levels long-term,” Tanner said.
Finemore welcomed the skepticism. “This is what I love to hear,” he told the Journal. Moreton is broadly bullish on agricultural commodities and is positioning specifically for rising cocoa prices on the prospect of El Niño disruption in West Africa and Ecuador.
Not all analysts share Finemore’s view. Oran van Dort, a cocoa analyst at Rabobank, said extended dry conditions in West Africa could push prices higher, but he leans toward Tanner’s assessment. Unlike the 2023–2024 episode, when El Niño struck a market already in deficit, current supplies are ample — partly because confectioners shrank chocolate bars and adjusted recipes to use less cocoa after the last price surge.
Hershey added a more fundamental objection: El Niño years can deliver good cocoa harvests as well as bad ones, and the climate’s “messy reality” can collide with the cleaner narratives traders build around it.
Moreton constructs its trades by feeding extensive weather data and historical prices into machine-learning models, the Journal reported. El Niño arrives only every few years, however, limiting the data available to train the algorithms. Climate scientist S. George Philander, in a 2004 book on the subject, described the phenomenon as “frustratingly whimsical.”
The article was written by Ed Ballard and published in The Wall Street Journal’s Climate & Energy newsletter.