Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

How Satellites Can Improve Decision-Making For Agricultural Investments

By Alexander SakalCommoditiesApr 15, 2020 12:27PM ET
www.investing.com/analysis/how-satellites-can-improve-decisionmaking-for-agricultural-investments-200521701
How Satellites Can Improve Decision-Making For Agricultural Investments
By Alexander Sakal   |  Apr 15, 2020 12:27PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

This March, market participants await the USDA monthly report as eagerly as ever before. The approaching coronavirus pandemic stirred up the uncertainty on the markets. The official predictions should serve as a guiding light for those looking for direction. However, the March report came practically unchanged compared with February, leaving lots of growers and traders confused — and nervous.

The April WASDE was traditionally almost unnoticed by the marker, despite its adjustments for the COVID-19 situation and its impact. The major players are waiting for the May WASDE that should give a sneak preview of the 2020/21 crop year expectations.

USDA information about crop supply and demand estimates is fundamental to both policy-makers and agricultural investors. Nevertheless, the current situation with markets and crops is changing faster than USDA report releases, especially with the uncertainty around coronavirus pandemics. Hence the question: How to act on the market that changes more frequently than WASDE reports are made?

The uncertainty caused by the outbreak of the COVID-19 reinforces the need for reliable, precise, politically neutral, and promptly available data for investors. Since the information gathered is classified until released, private companies try to predict the WASDE reports using different tools.

Here’s where digital tools can come in handy. Geospatial intelligence, supply-and-demand estimates, crop tours, experimental plots, direct contact with grain producers are among the most effective ways to gather much-needed data. This is where satellite technologies can close informational gaps – and do it faster than once a month.

How Satellite Imagery Can Enhance Available Data

Being the most respected forecast source, WASDE reports have a serious impact on the farming market and heavily impact the prices. On average prices move around 1.6% right after the release representing a difference of around $300 million in trading value.

Thus, the key to success lies in keeping up with the data gathering trends. When it comes to agricultural investment, there are dozens of aspects to consider. It requires evaluating the producer's track record, analyzing markets for the output, feedstock availability, soil fertility indicators, weather conditions, etc. Simply relying on report numbers and even physical examination of the fields is not enough.

However, if we add satellite imagery paired with powerful machine learning algorithms, one can see the trends and anomalies, even on a micro-level.

For instance, professionally interpreted satellite information allows us to assess current crop conditions for better forecasts. Day-by-day crop monitoring results along with machine learning algorithms can impact marketing strategy, future prices. All that makes satellite technologies an indispensable addition to the standard government reports.

It is especially critical to monitor commodities and stocks in response to major events to maximize ROI. During the COVID-19 outbreak with subsequent governmental and economical restrictions, decision-makers have to focus on the short-term changes to know if their investments can meet profit expectations.

European Experience

Satellites have already proven their power in the ag industry, becoming the choice of the well-respected institutions. The World Bank with financial support from the EU carried out a Supporting Land Governance in Ukraine Program. Part of the task was to develop a tool to ensure transparency and monitor for farming performance remotely. It turned out to be that this tool based on satellite imagery was also a convenient solution for farming investors.

EOS Crop Map tool, a part of the EOS Crop Monitoring platform, combined satellite imagery with machine learning algorithms. The software can recognize main crop types, field areas, track crop rotation, and essentially, assess land potential on certain farms and the country’s whole agricultural sector.

90% precision and compatibility with third-party services via API allowed its productive use for both governmental and commercial purposes. For example, the service discovered over 10 million acres of fields unregistered in Ukraine’s national cadastre with a multi-billion dollar turnover. The tool has also proved its effectiveness in identifying crop rotation violations that impoverish soil potential and defining fair land prices.

Using the platform’s imagery and analytics, traders can see current field conditions and historical crop records to conduct economical and financial calculations. The data opened the door for local agricultural commodities price predictions as well as the equipment and farming supply-demand estimation on any given district of Ukraine.

At EOS Crop Monitoring, we believe that timely and precise information can benefit everyone — the users, the business, and the environment. As for farming investors, they can use such tools to make local price forecasts together with the approximate supply and demand assessment based on satellite imagery analytics.

Satellite Prediction Era In Ag Industry?

Agricultural investing follows the example of the retail industry. It is entering the ‘remote prediction’ era where the one with superior AI tools has the edge. Elevated knowledge leads to greater investment opportunities, reduces risks and enhances profitability. Geospatial information along with satellite imagery and machine learning accelerates decision-making.

Researchers have already shown that combining satellite imagery data with WASDE reports increases returns. The European experience suggests that satellite imagery can be a valuable supplement to the regular investment approach in agriculture.

One can expect that satellite technologies with their great potential, being a cost- and time-efficient mechanism to get precise information about soils, crops, and fields, are to become a competitive advantage on the ag market.

How Satellites Can Improve Decision-Making For Agricultural Investments
 

Related Articles

Arkadiusz Sieron
Will Gold Survive Hawkish Fed? By Arkadiusz Sieron - Jun 22, 2021 3

The recent Fed’s hawkish turn is fundamentally negative for gold prices but there is still some hope. The hawkish counter-revolution within the Fed continues. On Friday, St....

How Satellites Can Improve Decision-Making For Agricultural Investments

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email