Objectives of the service
The global soya market value is estimated to be worth $180.3 billion in 2017 and is projected to be worth $265.4 bn by 2023. The global sugar market is estimated to be worth $97bn. Yield of these crops, as with most agricultural produce, is dependent on a myriad of environmental factors and is influenced by government intervention, policy and wider market activity.
Soft commodities, such as soya and sugar, and their related financial derivatives, are widely traded on exchanges worldwide, driven both by the purchase of the underlying physical goods and by the sale of “futures” (contracts for future purchase of the commodity at a given price), as standalone financial instruments.
At present, production data is only made available at fixed points through the year (usually after the growing season). The project will enable commodity crops traders to access updated production data on a more frequent basis than is currently available, allowing them to make more informed pricing decisions when they execute trades and so extract far greater returns from their trading activity.
The Soft Alpha project provides predictive analysis on soft commodity crop performance, in a sector that is currently dependent on historical data. In doing so, the project uses EO derived data products and analytics, to monitor performance on a dynamic basis, offering unique insights that not only provide competitive advantage to commodity traders, but also improve food security and increase transparency in regards to sustainability issues in the various supply chains.
Users and their needs
Soft Alpha Service delivers Data Products that target the following user communities with primarily focus on US, South America and UK:
- Commodity Traders
Commodity Traders are people or companies who speculate and trade in commodities. These traders either takes positions based on forecasted economic trends or arbitrage opportunities in the commodity markets.
At present, production data is only made available at fixed points through the year (usually after the growing season). The project enables commodity crop traders to access updated production data on a more frequent basis than is currently available, allowing them to make more informed pricing decisions when they execute trades and so extract far greater returns from their trading activity.
- FMCG Companies
FMCG companies are interested in commercial intelligence for key commodity products. The profitability of FMCG companies is directly linked to the performance of its supply chain and as such, the commodities used within it. Competitive advantage can be delivered for sugar and soya based products by obtaining market-leading insights into crop performance.
Consultants provide investment research and reports for asset managers, which include reporting on soft commodity performance.
Traditional means of providing such reports blend field based and desktop research, alongside existing datasets. Our EO data analysis will provide insight into the social and environmental trends that affect the key commodities traded around the world, that can be utilised by these consultants.
- Auditing organisations / Government
By providing more detailed insights on crop performance, the Auditing Organisations could influence governments to plan and implement policy accordingly.
Figure 1 Soft Alpha Service Data Products
Service/ system concept
Soft Alpha Service is focused on an effective and accurate reporting on crop extend, health for soybean, sugar beet and sugar cane accompanied by geospatial and temporal analysis. In doing so, the system creates clear competitive advantage for commercial players, as well as providing increased transparency across the supply chain. Information is made available to the customers via on-line, user friendly platform.
The key system components are shown in Figure below.
Space Added Value
The Soft-Alpha system makes use of the following space assets:
- Earth Observation (EO) data, to cost-effectively support assessments of climatic and crop parameters such as canopy cover, height and health using a mixture of sensor types including Synthetic Aperture Radar (SAR), Multi-spectral Optical Imagery and LIDAR. EO images have been sourced from ESA Sentinel (Sentinel 1 and Sentinel 2) and NASA Landsat constellation
- Global Navigation Satellite System (GNSS) devices for accurate geo-referencing of field validation locations.
Rezatec with support by Efeca, Hypothesis Research and Booker Tate and co-funded by the European Space Agency (ESA), has developed a service providing satellite data powered web platform for better decision making on soft commodity production, sourcing and trading. In this service Rezatec has brought together satellite and radar data into a user-friendly monitoring tool. The new service delivers accurate spatial monitoring of sugarcane, sugar beet and soybeans in-line with requirements of key commodity trade stakeholders: Consultants, Commodity Processors, Agro Holding Companies and FMCG companies.
The service is an easy to use, interactive and secure solution to ensure tangible benefits to its users.
Figure 2 Soft Alpha Service Data Products
The developed service meets the project objectives, which have evolved with improved understanding of market needs. Three successful pilot implementations and a first commercial deployment have set the stage for the commercial roll-out. Feedback from the pilot users feedback has demonstrated the value of the Soft Alpha tools for its users, while also identifying new features that can be added to the product roadmap for future releases. The Final Review was successfully held on 27 April 2020.