Simulating the effect of El Nino Southern Oscillation on the worldwide wheat prices

This work analyses the impact of El Nino Southern Oscillation on wheat production, and the consequent changes in prices at the global scale by using computer simulations. The identification of geographic areas relevant to the international wheat market and the integration of heterogeneous datasets are two of the results. Building on these, the local effects of the El Nino Southern Oscillation phases on the wheat yield are quantified using robust ANOVA regression, and their potential impacts on the aggregate production of each area are estimated. Finally, these estimates are provided as inputs to the computational model, which outputs the wheat prices of relevant production areas. Simulation results show how the cross-section distributions of prices, conditional on the occurring of El Nino and La Nina, spread to the right compared to that observed for the neutral phase phases implying an increase of average and dispersion of prices, although the effect of La Nina is weaker than that of El Nino.