Stay on top of market trends and agricultural commodity analysis with TradeFlows


Jul 23, 2020 | Commodity Trading 101

Reading time: 7 minutes

We live in a world where every walk of life is bursting at the seams with data. Think about the amount of data that you alone are generating. From the apps you use to the goods you buy to the programs you watch. Even the articles you read, such as this one. It’s all generating data. If you’re part of a company that deals in data, then you need to stay on top of it. That sentiment grows more and more significant in agricultural commodity analysis. 

The nuances of current agriculture industry trends are more detailed than ever. There’s a wealth of information available on trade goods, vessel schedules, and port logistics. Walking into a deal off the back of unreliable trade analysis is a sure-fire way to lose out on a long-term opportunity. In some cases, dealing with bad data could even sour your business relationships and undermine your efficacy. With your reputation on the line, dealing with untrustworthy data is a bit like playing with fire.  

But it’s difficult. Data can be, by its own nature, convoluted and tricky to deal with. We’ve already discussed the negative consequences of using antiquated methods to collect and organize your data. But that can be all for nothing if your data piles up from disorganized sources and becomes exhausting to track. Forget collecting it – the process of managing data can soon become overwhelming. 

Luckily it’s easy to take the sting out of data and transform it from an unruly nightmare to a dream come true. Our TradeFlows tool is a valuable asset for keeping on top of the data you have available to you. And that’s key. Because while a few missteps can leave you trailing in your competitor’s dust, all the right data management moves will keep you at the head of the pack.

Limited data means you miss world trade opportunities

Operating in-the-know gives you the best understanding of global export and import trends. That not only helps you understand what’s happened but also allows you to predict what will happen. But it’s tricky when the demand for commodities and their later movements change on a daily basis. That statement has never been so fitting in light of the global coronavirus outbreak and the trends that have followed. But the world doesn’t stop turning for your business. Even when uncertainty grows, you need to make sure that you have the right tools available for your trade analysis. You must be able to identify effective opportunities and capitalize on them.

A common pitfall for analysts and traders is to receive their commodity data too late. This can have a catastrophic impact on benchmarking for supply and demand analysis. Let’s take cargo as an example. You might think that you have a handle on vessel schedules and can recommend trades based on where you think global exports and imports will be. But what if things change? A ship’s cargo can look different next month compared to how it looks today. If you base recommendations on data that’s no longer relevant, then it will be disastrous for your whole margin. 

Let’s consider another consequence of incomplete data. When it comes to carrying out a contract, a trader needs to know what ships are in port, and provision properly for any potential demurrage costs that might arise. Let’s say you’ve sold a July shipment from Brazil. Based on the data you collate, you might assume that there will be no port congestion port and you’ll be free of paying any demurrage. But because you weren’t aware of other shipments, your vessel is now stranded for 15 days in the port. What happens then? Your demurrage payments spiral and your customers walk away, frustrated by your failure to deliver their goods. You’re then left with a few major issues. Demurrage costs haven’t been taken into account. You’ll have to deal with contractual penalties based on your failure to deliver a shipment. And finally, your business may be hit with reputational damage owing to your inability to manage risks properly. All this could tally up and have a disastrous effect on your mark to market value.

Tighten up your trade analysis

The key takeaway here is that things change, and quickly. A month might seem like a long time until you start thinking about the numbers. Agricultural commodities trade across thousands of vessels, so a month can be the difference between an opportunity lost and a deal struck. TradeFlows takes care of all that by delivering you frequent data with good latency. And because we standardize our data, the freight indications and vessel lineups that you view all share the same nomenclature. That means you’ll know exactly what’s moving and when, in output, that’s reliable and easy to use. It’s simpler logistics management that produces fewer risks.

Bad data damages your understanding of market trends

No one likes to have egg on their face when it comes to making bad decisions. We’ve all been there. Something slips the net or lets us down, and suddenly there’s an open can of worms off the back of one poor moment of judgment. 

A common mistake can happen when your data duplication management isn’t robust. You might have a rigorous data source that has all the variables you need. But not all data sets are perfect, and not a single one can account for human errors. Mistakes happen, and when they do, they lead to incorrect numbers. When the numbers are bad, you end up with wrong benchmarking, and you don’t need us to explain the consequences of bad benchmarking. All it comes down to is that no matter how impressive the data is, it’s all for nothing if you can’t protect it against errors.

Get a handle on what ships are in port

We’ve already explored how unreliable and obsolete data can bring you a heap of problems. But what about the problems you’ll cause for others? Don’t forget, we make trades using an intricate model of what ships and in port and when they’re due for departure. But this information doesn’t scratch the surface of what’s needed to do business in good faith. 

Consider cargo changeovers. By law you might need to account for a vessel to be cleaned – so do you have sight of the previous consignment? And do you have the time to clean the vessel and load before you’ve marked the time for departure? Then there’s the small matter of unloading once your cargo arrives at its destination. You can only have so many vessels in a port at one time. So you best know how much time you have and the arrangements you need to make so you don’t block any other arrivals. Failure to do any of this could end up in hefty demurrage. Depending on the amount you’re charged, such demurrage could have a drastic impact on your margin.

Get reliable data on global exports and imports

Organized and reliable data tells the whole story. That much is obvious. It’s key for making successful trades and running effective risk management. But we can’t overstate how disorganized and sloppy data can actively harm commercial performance. TradeFlows is a vital tool in fixing this issue. It offers an easy and efficient analysis of data that’s organized, reliable, and, most importantly, extensive. The database contains over a million data points and over 200,000 voyages tracked to this day. And, since we partnered with SGS in 2017, our data is definitive, having been tracked from around 4,000 vessels per month with the support of trusted networks such as Alphamar, EUROPAC, and NABSA. As a result, the data we yield allows you to perform efficient analyses, because each vessel lineup shares the same metadata structure, giving you an unparalleled advantage over your competition.

Boost your agricultural commodity analysis

It’s clear that in 2020, it’s more important than ever to be on top of market trends. A global pandemic has thrown a cloud of uncertainty over many industries. Agricultural trade is not exempt. Consider the high level of detail in the data that’s available, and you’ll have your work cut out for you without proper preparation and analysis. 

We’ve designed TradeFlows to take the uncertainty out of your analysis and research. You’ll get reliable data structures that are organized and always up-to-date. And the tool itself is improving. Over the next few months, the database will be reshaped to be even more effective at validating data. We’re also working towards a double coverage model. We want to ensure that we gather information from two different sources for each flow of data. That means everything you get is overlaid and verified. The result? More comprehensive datasets that reduce errors, so you can accurately predict price changes. That’s less time collecting, more time analyzing, and no time at all getting straight to the point.

Want to get started with TradeFlows? We offer a free seven day trial with no strings attached. You’ll also get access to our other products, including PriceDiscovery. You don’t need a credit card to try it, and you’ll see for yourself why TradeFlows is the easiest and most effective way of staying on top of cash prices, import-export flows, and freight indications.

Related Topics: Supply & Demand