3 Reasons Why You Should Stop Working With Unreliable Cash Price Data

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Jun 15, 2020 | Insights

This guide explains the consequences of unreliable cash price data and shows how to save time collecting accurate, clean, and privileged agricultural commodity data.

Ask yourself this simple question: Am I working too hard for data that isn’t working hard enough for me? 

If you’re feeling like you spend too much time hunched over your laptop, scrolling through chaotic spreadsheets and long-archived emails, then the time has come to switch up your methods. There are quicker and easier ways to collect commodity prices today, so the time to change is now. The last thing you need is to be left behind your competitors. 

Whether you’re making trades or keeping track of world trade flows, staying on top of market movements is your number one priority. But with the market moving at such a pace, it’s easy to fall into common traps that leave you falling further and further behind. On top of that, the data available is complex and precise. The slightest misstep in correlating your cash price data sets can be a major setback in your strategy. The hard truth is that collecting accurate data is only possible by using the best tools. Without them, you’ll find yourself with bad data. And bad data means bad decisions. 

It’s not all doom and gloom. While a mountain of problems can easily arise, we have a solution that can conquer it. Be warned – without it, there are common pitfalls that like-minded commodity traders, risk managers, analysts, and brokers might struggle with. We’re here to reveal those pitfalls for you and explain how our PriceDiscovery tool helps you avoid them. And the cherry on top? You’ll save time looking for commodity prices. Which is great, because we all know that time is our most precious commodity. 

Manually collecting data leaves you behind the curve

 

Timing is everything. This sentiment has never been more appropriate than it is in today’s market. The 2020 outbreak of Coronavirus continues to have a significant impact on economies across the globe. But current events aren’t the only factor in determining a commodity’s relevance. Staying on top of your cash price data is vital for a successful strategy.  

Let’s say you’ve recently spent days building up the logistics needed for your next trading opportunity. Chances are it was a painstaking process. You might have relied on your data suppliers for the moving schedules of some vessels. But sadly, all that work and effort is for nothing if you can’t rely on the data being up to scratch. Who’s to say that manually reaching out to your data suppliers can yield information that’s completely reliable? Many traders have found themselves a day late and a dollar short, all because they’re insistent on using cash price data that isn’t up to date.

Tools of the trader

The data available has never been more dynamic. But as a result, it’s becoming more difficult to keep track of commodities and stay in the know with how they’re moving. Staying true to your data suppliers isn’t effective as it once was. The need for a tool to work alongside your strategy has never been more important. So how does PriceDiscovery help?

Simplicity is the key. Data sets can be overwhelming, and that’s putting it lightly. So the first step is taking that complexity and disentangling it into an easy-to-digest interface. You then get the freedom to focus your efforts on generating trades and tightening your investment strategies. The best part is that the data is aggregated updates daily. You see the market situations as they unfold, do you don’t miss any opportunity with data that’s out of date. 

The cost of data discrepancies

Making sure your data is up to date isn’t the only component to executing a successful trading strategy. After all, a trading strategy is only as good as the decisions that go into making it. Those decisions come from an array of data sets, drawn from even more sources. So what happens when your data sets aren’t comparable? You end up reaching the wrong conclusions, which means your strategy suffers. 

Imagine for a moment that you’re building a long-term strategy on two commonplace commodities: wheat and corn. Right off the bat, your approach isn’t going to be as straightforward as you’d like. Those are two different data sets you’re working with, and they’ll most likely have major price disparities. But that might not be the only problem. What if your wheat trade data set is ten times the size of your corn trade data set? Without the right tools to handle and correlate the data, you’ll draw the wrong conclusions about their relationship and your strategy will be wide of the mark. That’s where things start to get messy. An ill-informed strategy will lead to bad commercial decisions. Once bad decisions start to pile up, and you fail to make trades and miss out on key movements and trends, it’ll end up costing you a lot of money. 

Stop wasting time manually comparing data

It’s easier than you think to move away from a manual process. Why not aggregate your data sets with a simple click of a finger? Or maybe even the swipe of a screen? We designed the PriceDiscovery tool to save you time. Think of it as a simple app, much like the one you use to set up your morning alarm or check the weather. Because that’s exactly what it is – a simple app that you use day-to-day. The PriceDiscovery tool has an interface that’s set up for mobile, so it seamlessly incorporates the way you work. So you get to stick to your own routine, and PriceDiscovery does its thing in the background.   

The devil in the details

Comparing data sets is all for nothing if you can’t drill down into the finer details. You might have a good handle on the price for your commodities, but what about everything else? If you don’t know your Incoterms, shipping movements and specifications, then the data sets you have for your commodities will become a nightmare to use. 

Let’s take a standard example to show what we mean by this. Wheat trade might seem like a commodity that isn’t complicated, but once you dig into the details, managing the metadata becomes tricky. Wheat Black Sea is not the same as Milling Wheat Black Sea. And neither of those are the same as Feed Wheat Black Sea. They’re all wheat, of course. Their names are similar. But their nuances vary and, depending on when you’re collecting the data, the specifications that define them can be something completely different. This means that these three types of wheat simply don’t correlate easily, no matter how similar you think they are. The fewer specifications and details you have ultimately means the less meaning your analysis will yield.

Still not convinced? Let’s try another example with the same type of commodity. If you compare Argentina Wheat prices with Russian Wheat prices, there are a handful of details you’ll need to get your head around if you want to get a clear view of the quality of the wheat that you’re dealing with. What Incoterms are the commodities priced against? What are the protein percentages of the wheat that you’re correlating? And what class of vessel is being used to transport them? These are just a few examples. These factors are vital in defining what makes a good price for trading. Only a well-furnished data set with clear metadata will form a sound price discovery process.

Consistent data that works around your schedule

Consistency is key when it comes to data collection. At the end of the day, we’re all creatures of habit who like to work in our own ways. At AgFlow, we’re passionate about making sure your data reflects that. That’s why all the cash price quotes you get through PriceDiscovery share the same metadata structure. That makes them easy to integrate with the way you trade, track, and analyze. On top of that, the process of extracting that data can adjust to whatever it is you’re looking for. Need to filter by shipment destination? No problem. We need to know the shipment type on top of that. A simple click. You can apply all the specs you need in a matter of seconds, and what you’re left with is a data set that’s consistent and reliable. Not only does it do the legwork for you, but it saves you time and eliminates mistakes. 

You don’t have to do things the hard way

It might sound like a broken record when we say that new technologies continue to influence and evolve how markets operate. We all know this. But the key question is what are you going to do about it? Are you going to keep trawling through the same old spreadsheet for the perfect cash price that might not ever come? Or could you instead do yourself the biggest favor and let something else do it instead? There’s no better feeling than putting your feet up knowing that something is taken care of. You might as well take care of your data, so it can take care of you.

To find out more about PriceDiscovery, you can visit the page on our website where you can activate a free 7-day trial. You don’t need a credit card to try it, and you’ll see first hand why PriceDiscovery is the world’s most comprehensive source for agricultural commodity cash prices.

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