Risks to global food prices from El Niño

Jakob Adolfsen and Marie-Sophie Lappe

Economic Bulletin Boxes, 2023, vol. 6

Abstract: After three years of below-average ocean surface temperatures, the arrival of El Niño this year implies risks to global food prices. El Niño is the warm phase of the temperature cycle in the East-Central tropical Pacific, when ocean surface temperatures exceed normal temperatures by at least 0.5 degrees Celsius. The effects of El Niño on climate patterns are complex, although the phenomenon is likely to put upward pressure on global food commodity prices due to higher risks of extreme weather events, which have already been taking place more frequently in recent years. The magnitude of the effect on global food commodity prices depends on the strength of the El Niño phenomenon. In turn, if current conditions develop into a strong El Niño, it could cause global food commodity prices to increase by up to 9%, with the strongest effects expected for soybeans, corn and rice. Accordingly, financial markets appeared to factor in future price increases for grains as well as higher uncertainty about future grain prices immediately after it was announced that El Niño conditions had arrived. JEL Classification: Q02, Q17, Q54

Keywords: extreme weather; Food commodity prices; risk assessment (search for similar items in EconPapers)
Date: 2023-09
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