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What Is Our Advantage?
1. What is the unique advantage of Commodity Hedgers to traders?
Traditionally, analysts, brokers and traders have put most of their resources into predicting the movements of commodity prices based on technical disclosures. Trading on the weather's impact of crop yields (fundamentals) was too unpredictable to return a steady profit. Scattered surface observations and weather forecasts do not have a consistent or dependable relationship to real time crop development or ultimately to future yields. Our proprietary surface temperature, wetness and snow cover products have changed the traditional rules by providing timely and dependable information about surface conditions. Every organization that has used or evaluated our satellite-derived land-surface products, agree that they are superior to any “fundamental” information offered in the global marketplace today.
2. Why would traders and hedgers want to know surface conditions?
Surface conditions are the foundation of crop development. Without the right amount of heat and moisture, plants are under stress, and the level of stress has a direct relationship to future yields. Moreover, surface conditions impact the farmer’s ability to perform fieldwork, if it’s too wet they can't go into the fields with their equipment. Excessive wetness and lack of fieldwork allows weeds and all sorts of diseases to spread. Furthermore, even if it is an excellent crop, when the farmer isn’t able to harvest at the correct time, the crop will deteriorate in the field during harvest season. Our products provide valuable insight on changing growing conditions around the world, which directly translates into changing global prices for the commodity.
3. What is our unique advantage to growers/producers/marketers/distributors of world agricultural supplies?
The availability of the future food supply starts with plowing the fields and ends with the distribution of the final yields. The health of the current crop directly impacts local availability, prices, arbitrage, redistribution needs and future plantings. We provide a valuable window of opportunity for our clients to position themselves against the constantly changing yield-estimates around the globe.
4. Why are our products so important to global food security, supplies and distribution?
We have the ability to monitor droughts, floods, and crop failures as they develop. We also see the severity and true distribution of these events across the globe. Our products provide the insight and information needed by policy makers to reduce the impact of these natural disasters.
5. What is the advantage of microwave over traditional satellite observations?
Microwaves penetrate, that is why we use them to cook food from the inside out, and can communicate using microwave on our cell phones inside buildings. Natural microwave radiation coming out of the earth serves as the signal received by the satellite. These signals penetrate through most clouds, providing a clean signal from the earth's surface. We see surface conditions under almost all types of weather. In contrast, it frequently takes the NDVI a week to obtain a clear view, while we are constantly receiving updated measurements.
6. What is the advantage of surface observations versus a weather forecast?
Models don't see the earth’s surface and many of them are not even anchored on ground-truth. Forecasts are only as good as the input data, physics of the model, parameters included, and the robustness of the assumptions. We know all about models and weather forecasts at Commodity Hedgers Inc. Our combined staff has served as forecasters at two international airports, as well numerous television and radio stations. Moreover, we spent over five years as research meteorologists at the World Weather Building, the operational headquarters of the National Weather Service.
Granted, there are times when a weather forecast can provide meaningful information, such as the prediction of a major storm in the next day or two, but the accuracy and ability of the model to predict the true spatial influence of the storm is marginal, if not absolutely wrong. Moreover, a multitude of factors influence crop development at a location, and the model poorly integrates these influences.
7. What is the advantage of monitoring snow cover?
Many crops are planted in the fall, such as winter wheat and barley, and over the winter in the fields. In many regions snow cover is essential to insulate seedlings from bitter cold air. If the crop is snow-free and a major cold outburst sweeps through the area, the crop can be severely damaged or killed. By monitoring snow cover, you can observe the how crops will be protected from these cold air intrusions. Also, a good snow pack is usually essential for good soil moisture supplies during the early part of the growing season.
How Do We Do It?
8. How can we see through clouds, while others can't?
Our answer is microwaves. The real question is. “Why don't others use microwaves?” The easy answer is that microwave signals are complicated to use. Surface emissivity is extremely variable in the microwave spectrum. We have spent decades learning how to effectively apply microwave radiation to monitor surface conditions. Very few people have investigated the value of microwave for monitoring surface conditions around the world, and only a handful have applied this understanding to real world application. As far as we know, we are the only organization that applies this knowledge directly in agricultural and commodity trading.
9. Why don't other organizations provide microwave observations?
The simply answer is that only a few have tried. Yet, as it becomes more and more obvious that our proprietary systems see what others don't, there may certainly be those who will try to imitate our approach. That is fine. We are confident that our 15-years of research and calibration has provided us with a major head start, and we are not slowing down.
10. What do we mean by anomalies?
Anomalies are variations from the norm. We calculate the average surface wetness, temperature and snow cover for each location and time of year. Then we identify how the current conditions differ from the 15-year average at that particular time and place. This gives you the ability to view an event in context of what you would expect. For example, how much wetter is it in the middle of July in the southwest corner of Oklahoma, compared to the average over a 15-year period? Therefore anomalies allow you to make a quick and accurate interpretation, without having to be trained as a sophisticated analyst.
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11. What exactly do you mean by wetness?
Our wetness product is our most highly acclaimed product. Since microwaves penetrate, we see liquid near the surface, regardless of its source. Wetness, as we see it, is a combination of water on the surface, from precipitation as it falls, snow melt, irrigation supplies, water in the upper soil, and even water in the leaves. Our ability to monitor wetness from any source is what makes our wetness data so valuable. We can also see the effects of integrated water, and whether the irrigation is adequate or inadequate for the health of the crops.
12. How do you measure snowmelt?
As a snow pack begins to melt, it usually refreezes at night, allowing very little water to exit the pack. This changes when temperatures have gotten warm enough that the entire snowfield reaches the freezing temperature and liquid water is distributed throughout the vertical profile (the snow pack is then known to be “ripe”). At this ripe stage liquid water rapidly exits the pack. Since microwaves accurately measure liquid water near the surface and penetrate throughout the profile of the snow, we obtain a clear measurement on the amount of liquid in the snowfield. This water serves as a source of soil moisture and irrigation supplies.
13. How do you measure irrigation supplies?
The magnitude of liquid in the snow and the temperature at the surface determine the rate in which melted water exits the snow pack. Since we monitor events relative to normal, we can easily determine if there is more or less water available from melting snow. In addition, since we see the integration of all water sources near the surface, as irrigation water is distributed across an area we observe it. Since we monitor events relative to normal, we can easily identify if there is more or less irrigation water for crop production.
14. Do you use any surface observations?
We don’t use any surface observations in our reports or data. However, in order to calibrate our algorithms to the highest accuracy and to produce the data sets, we used in situ observations as ground truth.
What Are Our Limitations?
15. Why does CHI use a 15-year base period?
The SSMI satellite instrument was first flown in mid-June 1987. Therefore we started our climatology in 1988, and have been receiving satellite observations from the SSMI instrument since that time. This allows us to calculate a base period climatology from the complete period the satellite instrument has been in space.
16. Will the base period (climatology) keep changing?
Maybe. We have always updated our base period as new observations become available. This allows CHI to extend the climatology to its maximum length, and the longer the base period, the more stable and informative the anomalies become. However, in order to guarantee that all the data sets and anomalies use the base period, we recalculate the anomalies from the previous years, using the new base period. This optimizes the value of both prior and contemporary data.
17. Why is the resolution 30 Kilometers?
Microwave antennae are large relative to visible or infrared antennae. Therefore to get comparable resolution it would take an antenna the size of a football field. The resolution of the SSMI data works nicely at the county or district level in most countries. The primary growing areas of the world are the size of over one hundred of our individual observations. We see the bigger picture. We can't say much about the individual field, but we can speak as experts on the impact regional growing conditions have on the total yield.
18. Can the resolution increase?
Yes, actually the satellite does see at a resolution nearly 10 times higher than what we are providing. We are very interested in improving our products with the superior resolution. As you can see from our history, we always stay on the cutting edge. If you are interested in joint venturing with us on the new generation of data please contact us with your proposal through this website under Contact Us.
19. What are orbital gaps?
The SSMI instrument has approximately a 2000 Km swath from right to left as it goes around the world from pole to pole. Since the earth is widest at the equator, this is where the parallel orbits are farthest from each other, these non-observed territories outside the orbits are known as ‘orbital gaps’. These gaps shift location each day, so that even at the equator there are usually at least two observations in a three-day period, one in the morning and one in the afternoon. The obits converge toward the poles and the orbital gaps completely disappear at 55 degree from the equator.
20. Why is the satellite data less accurate near the coast?
If the satellite observation is near the coast, it receives part of its signal from the water and part from the land. The percentage of each surface type shifts from day to day. Therefore, some days look wetter than other days, depending upon the relationship of surface type in the observation. This is “noise” and it is difficult to remove. Therefore, we remove the coastal observations from our data sets, and are reluctant to analyze the adjoining pixel, since it also contains some noise. By the time you are 2 pixels away from the coast, the accuracy of the observations returns.
21. Why do you only see near the surface, and not deeper into the soil?
The depth a microwave penetrates the soil depends on its wavelength. The longer the wavelength, the greater the penetration is. It is still disputed in the scientific community how far the wavelengths between 19 and 85 GHz penetrate. We have clear evidence that it is many centimeters, which allows us to obtain a valuable measure of upper level soil moisture.
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