COMMODITY FUTURES MARKETS: HOW TO EARN MONEY USING SATELLITE IMAGES - STUDY: MONITORING OF FROSTS IN COFFEE CROPS, AN EXAMPLE OF THE REMOTE SENSING AS AN INVESTORS TOOL

INTRODUCTION. 

In this section we present as example a study made for a client who is investor in the commodity futures markets, more specifically, in the coffee futures market. It's important to emphasize, that although the occurrence of severe frosts in the south of Brazil has an immediate impact in the evolution of the coffee in the NYBOT market, another kind of meteorological events can hit in the evolution of other commodities, such as soybean, wheat, corn, etc.. Extreme events such as floods or droughts (in addition to frosts) in high density agricultural zones, hit annually in the trading dynamics at worldwide level. And it's in this context in which the suitable application of the satellite remote sensing in these areas, and the evaluation of the damages that these phenomena entail, can become a crucial tool for the operators decision making in they corresponding investment sectors.

1. OBJECTIVES 

The present study, made in winter of year 2000, constitutes a first satellite remote sensing test of the climatic conditions in the Brazil coffee area. Its primary target was to detect in real time the occurrence of frosts and the temperatures reached, specially when they possibly descend below the lethal threshold for the coffee plant. The work involved, parallelly to the direct analysis of the satellite information, an analysis and correlation of the press data, the meteorological reports of diverse sources and the information of the evolution of the market through Internet (NYBOT commodity charts in almost real time). Being this study the first that we made with this objective, it must be taken as "case history", with the particularitity of which during this study accomplishment intense frosts in the coffee zone, situation that doesn't occur very frequently (the last lethal frost dated from year 1994). This fact, obvious negative from the agronomy and productive point of view, had the counterpart to offer us the possibility to evaluate the validity of our methodology for the pursuit of frosts in virtually real time as well as to investigate the degree of synchronization of the answers of the futures markets with the real climatic fluctuations or simply foretold. Also it gave us the opportunity to anticipate modifications of methods and equipment to improve future monitorings. The used satellite images (satellites NOAA 12 and 14 in nocturnal passages) were all received by our ground station of El Pinar (Dpto. de Canelones, Uruguay).

2. GENERAL CONSIDERATIONS 

There are two coffee that are cultivated for commercial use at worldwide level: robusta and arabica. The first one it's developed in low elevation lands, produces greater yield by plant and is more resistant to the diseases that second. Nevertheless, robusta it's characterized by a lower flavor quality and low caffein content. Arabica, that it's developed better in more high lands, it's the source of the best international coffees. Brazil is the greater coffee producer of the world, being the great majority of its cultures of arábica species. The coffee is cultivated in Brazil in an ample geographic rank under very varied climatic conditions, with pluvial average precipitations that vary according to the region from 800 to 1600mm annual. The more favorable tempertaure limits for this specie development are considered between the 15 and the 25 ºC, and in the more important Brazilian coffee areas, it varies, according to the altitude, between 16 and 28ºC. The more losses average temperatures more are registered from June to August, and the highers from November to January. The north of Parana, located between 22,2 and 24 degrees of South latitude it's exposed to the frost risk, some very intense although little frequent, like that it happened in winter 2000, and which that we´re reported in the the present in study. It's important to emphasize that in this case, the low temperatures and frosts were projected more eough towards the north, reaching the state of Sao Paulo and the "Triangilo mineiro" (South of Minas Gerais). It's considered that the lethal threshold for the coffee plant is of -3.5ºC, although temperatures a bit higher to this threshold, maintained per prolonged periods, can produce serious damages too.

The present study was made using images received from the satellies NOAA 12 and 14 in our ground station. The nocturnal orbits were used and their spectral bands of the thermal infrared were used. We can have two nocturnal passages of such satellites, but not always their orbits have the most favorable position to receive the information. Anyway, as you will see in this report images, the received information was extremely useful for our objectives. Due of the experience acquired in this first stage, we have decided to use that for futures monitorigs (in addition to the data of the mentioned polar orbit satellites), the information of a geostationary satellite (GOES-8). At the moment, our station can receive every three hours images of this satellite although only in a format WEFAX, whose main limitation is based on the difficulty to calibrate temperatures, critical parameter for our applications (not only for the the coffee monitoring, but also for other projects in course). As opposed to these limitations we are implementing the equipment to receive information of this satellite in the GOES-Variable system. In this format, we will recive the information of five spectral bands, between the visible spectra and the thermal infrared, which will allow obtain with a frequency of 30 minutes: 

* Precise measures of temperatures in the thermal infrared. 

* Measures of water steam concentration in the atmosphere, parameter of great value in the frosts forecast. 

* Pursuit of the evolution of the clouds cover, diurnal and nocturnal, which also constitutes an important information in this application. 

IMPORTANT NOTE: At the date to be written this work (half-full of the 2000), the coffee was the second commodity imported by the USA following the petroleum. Years later, the steep loss of the coffee prices caused that this market stopped being attractive for many investors. For that reason, some years later we decided to discontinue this project. Despite it, we considered that the publication of this work in our Web site, could be helpful to exemplify with a practical application, whose economic benefits were very positive at that moment, the potentiality that the satellite remote sensing has as a source of valuable information for investors in the area of the commodity futures markets.