Agricultural commodity market responses to extreme agroclimatic events

Economic simulation models typically assume ‘normal’ growing conditions in eliciting agricultural market projections, contain no explicit parameterization of climate extremes on the supply side, and confound multifarious sources of historical yield fluctuation in harvest-failure scenarios. In this paper we augment a partial equilibrium model of global agriculture with a recently developed compound indicator of agroclimatic stress. We perform a multi-scenario analysis where the most extreme temperature and soilmoisture anomalies of the last decades, both negative and positive, recur in the near future. Our results indicate that extreme agroclimatic conditions at the regional level may have significant impacts both on domestic and international wheat and maize markets.