August 1, 2009

 

US agriculture trade increasingly eyeing Twitter to share information

 

 

Social networking service Twitter has not only become an Internet phenomena, but also an innovation channel whereby the agricultural trade can exchange information quickly on a real-time basis.

 

When Thomas Grisafi read a "tweet" the afternoon of July 22 complaining that the USDA had "goofed again," the president and chief executive of Indiana Grain Company wondered what had prompted the message.

 

Curiosity aroused, Grisafi was soon reading about the USDA's announcement that it would re-survey planted corn acreage in several states, a move with potentially big implications for CBOT corn futures. Grisafi stayed at his desk, made some phone calls and prepared for a rally in the overnight electronic trading session.

 

"I ended up having one of my best days in months that night," Grisafi said. "It really affected me, to the sum of a large amount of money."

 

For Grisafi and a growing number of people in the agricultural commodity sector, social networking, particularly Twitter, is playing a role in assessing the markets.

 

Traders, analysts and farmers are using the 140-character Twitter messages, called "tweets," to share information about fundamentals, offer instant reaction to market moves and to publicise their businesses.

 

Farmers have long used the Internet to share information, starting years ago with bulletin boards and chat rooms. But current tools are more direct.

 

Jason Britt, president of Central State Commodities in Kansas City, said while older farmers have only in recent years become comfortable with text messaging, younger farmers have taken to Twitter.

 

Instead of relying on government crop surveys, or even phone calls with producers in varying parts of the country, Twitter can provide real-time feedback, he said.

 

"I have guys on there from Iowa, I have guys on there from Nebraska, Missouri, Illinois," Britt said.

 

Analysts said the service seems well suited for a sector that urgently devours new bits of information about the condition of crops or livestock, as well as political or regulatory developments and market moves.

 

The information flows both ways. Arlan Suderman, analyst for Farm Futures, said he initially thought Twitter "looked kind of worthless." But considering how farmers crave real-time market information while out on their tractors, he said, Twitter seems like an excellent vehicle. He has 760 people following his updates.

 

"I want to communicate to the farmer who hears on the radio that soy are up 30 cents why that is, and what the driving factor is behind it, in language they can understand that's not trade talk," Suderman said.

 

Like many of the market analysts who are tweeting, Suderman don't just offer up snap 140-character takes on the market. Many analysts' tweets are links to articles or information on their Web sites.

 

Britt notes that farmers often will post photos of their fields. Seeing pictures of a corn crop "that's as dark green as it can be, it doesn't make you bullish in the corn market at that moment," he said.

 

On the downside, analysts note that there are lots of superfluous tweets to weed through, from sales pitches to updates on a child's baseball game.

 

Also, analysts said they have to be skeptical of the reliability and consistency of all the different sources on Twitter. For instance, a couple of brokerage and advisory firms that analysts cited as examples of embracing the technology haven't tweeted in weeks.

 

Traditional sources of market news, such as wire services, should not be threatened by Twitter's growth as long as they provide fast, accurate news, analysts said.

 

"Twitter's hit or miss," Grisafi said. "If you're going to be a professional trader, you're going to pay for information."

 

The spread of Twitter as a trading tool extends beyond the agricultural sector.

 

StreamBase Systems, which makes algorithmic trading platforms used by hedge funds and brokers, drew widespread attention late last month when it announced it had developed software that allowed users to analyze Twitter messages in real time.

 

John Lothian, president of John J. Lothian and Co., a money manager, publisher and consulting firm, uses Twitter to pass along stories and tidbits of interest. Lothian focuses on "non-price risk-oriented news."

 

He is unsure of Twitter's role in guiding specific trading decisions.

 

"I don't think you can do that, because it's not as robust and real time as you would like, sometimes it takes a second to post," Lothian said.