The global market for agricultural commodities has seen sudden price increases in response to extreme weather events in the past, and as the climate changes during the 21st century, the frequency and intensity of extreme weather events will also change. The IPCC assesses with high confidence that “all aspects of food security are potentially affected by climate change, including food access, utilization, and price stability”.
In this study, we attempt to unpick the climate and climate change impact on global commodity prices, by examining the impact of climate on price, from the perspective of global agricultural trade. The analysis is an initial assessment of important climate drivers of food price volatility, with the aim of guiding more in-depth analyses and providing a foundation for future research in this area.
The report starts with a literature review of current research focussing on the relationship between climate, and the potential impact of climate change, and commodity prices. This is followed by analysis assessing the relationship between the El Niño Southern Oscillation (ENSO) – a large scale driver of inter-annual variability – and observed global commodity prices. Finally, a similar analysis is undertaken using indices of weather events, in place of ENSO, for comparison. Based on the analysis performed, a set of recommendations providing a focus for future research in this area are provided.