El Niño and Agriculture: Weather Shocks, Supply Risk and Market Pricing

Introduction to El Niño

The El Niño-Southern Oscillation (ENSO) is a naturally recurring climate pattern in the tropical Pacific Ocean that has a global influence on temperature and precipitation patterns. El Niño is the warm phase of ENSO. During an El Niño event, ocean temperatures in the central and eastern tropical Pacific become warmer than average, while low-level surface winds weaken or may even reverse direction. El Niño events are an important source of predictability for weather and climate impacts around the world.

An El Niño event is declared when sea surface temperature (SST) anomalies in the central-eastern Pacific Ocean exceed +0.5°C for several consecutive months and the atmosphere responds to this warming. Confidence has been growing in recent months for an El Niño to develop later this year. Recent model guidance indicates that a strong El Niño, with anomalies above 1.5°C, or even a very strong event above 2.0°C, could develop, however there is still uncertainty in the potential strength. In NOAA’s April ENSO update, the probability of El Niño emerging in May-July was raised to 61%, up from 45% in the March update. NOAA places the likelihood of El Niño developing this year at over 90% and gives a one in four chance of a very strong El Niño developing by the end of the year.

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