The video quickly went viral: a Nebraska farmer, clad in a life jacket and blue jeans, skimming across his uncle’s flooded field on a wakeboard.
Quentin Connealy’s watery ride last month became a minor sensation on social media. It also added a data point about a soggy start to the growing season in the US midwest. Grain traders took notice.
A new transparency is taking hold in agricultural markets, once an opaque realm. From farmers’ Twitter posts to weather maps, shipping data, satellite photos of fields and online grain marketplaces, it is chipping away at the insider advantages of international grain companies.
Analysts are debating whether the rapid spread of information means structurally lower profits for the trading arms of a grain industry led by the “ABCD” companies — Archer Daniels Midland, Bunge, Cargill and Louis Dreyfus.
“There’s less information arbitrage. That was one of the core elements of their edge,” says Alex Keane, a former trader for Cargill who helps run Pathway Agriculture, a Geneva-based investment manager.
Broadly speaking, insider trading is an essential feature of commodities markets. A farmer who observes good weather and heavy corn seedings by his neighbours might hasten to sell his corn crop before prices decline.
Grain companies have traditionally multiplied the farmer’s powers of observation through global networks of warehouse and port managers, in-house meteorologists and agronomists and central communications. Cargill’s private teletype system, used for most of the 20th century, was “one of the company’s strongest competitive advantages”, the company says.
“The gap has narrowed significantly,” says a former Cargill employee who now trades for a hedge fund. “The amount of information we have access to or can get our hands on is very, very similar to what a Cargill or ADM or Bunge or Dreyfus had.”
The transparency starts in the wifi-enabled cabs of modern tractors. There, farmers outfitted with as many screens as a Wall Street trader can monitor weather maps, track government reports on acreage or crop production, execute sales to the local silo complex or trade agricultural futures. Multitasking is easy because the tractors can steer themselves.
“They’re running mini-hedge funds out of their cabs,” says Farha Aslam, food and agriculture analyst at Stephens, an investment bank.
Karl Setzer of MaxYield Co-operative, an Iowa grain company, says farmers used to like personal visits from grain merchants. “The majority of farmers today don’t want that,” Mr Setzer says. “Some you couldn’t track down if you tried. They’d rather have a text message, an email.”
The most powerful data in grain markets still come from government agencies such as the US Department of Agriculture and Conab in Brazil, which report detailed figures on planting area and crops. While public, the internet has speeded their dissemination.
Guessing what the official numbers would say has long been a speciality of commodity brokers. But a growing number of companies have improved how they process data from satellite images to offer yield predictions ahead of the agencies. “Early tech firms like us are going to work pretty hard to democratise this stuff,” says David Potere, chief executive of Tellus Labs, a start-up which touts the accuracy of its satellite-based 2016 US soyabean and corn yield forecasts.
Meanwhile, Mr Keane says subscription weather services have become more tailored to agriculture in the past decade.
Then there is what farmers call “Ag Twitter”. Just this week, users of the messaging service posted comments and photos about “rough-looking” crops in Indiana, stunted soyabean seedlings in a dry South Dakota and hail-damaged corn in Minnesota.
Mr Connealy, of Tekamah, Nebraska, posted his wakeboarding video on Twitter after five inches of rain fell in a week in an attempt to “put our little town on the map”, he says.
But Twitter is also useful for his business: growing corn and soyabeans for sale mainly to Cargill and Bunge. He follows hundreds of farmers and industry experts to keep abreast of grain markets.
“You can always pay a marketer to study that stuff for you. You pay him quite a bit,” Mr Connealy says. “But if you can pull it up on Twitter, it gives you more perspective.”
A fire hose of information is no guarantee of quality. Even the best-informed traders make mistakes, as shown by high-profile losses in soyabeans last year.
But it’s nevertheless changing the economics of agricultural trading. “The arbitrage power that a lot of the big trading houses had,” says Rajiv Singh, a senior executive at Rabobank, “is clearly getting eroded by the transparency and availability of data.”