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Commodities

Drilling for data gold: who has the tools for commodities success?

Leigh Henson

26 Jun 2017

Fishermen drill ice-holes during a competition in Russia’s far eastern city of Vladivostok. Photographer: Yuri Maltsev

In a commodities market characterized by geopolitical and supply chain complexity, which pricing and data tools are professionals using to stay ahead of the competition?

Whether the impact on supply and demand comes from China, President Trump’s infrastructure plans or European elections, commodities professionals are having to make better, faster and more fact-based decisions.

Get award-winning commodity trading insight with Thomson Reuters Eikon

 

But understanding evermore-complex data requires sophisticated analytical tools to interpret the volumes of information and to benefit from changing market dynamics.

Thomson Reuters exclusive survey of 743 commodities professionals looked at the solutions needed to achieve this insight, and asked whether participants planned to increase investment as a result of positive market conditions.

743 commodities professionals took part in a Thomson Reuters survey
743 commodities professionals took part in a Thomson Reuters survey

The survey results and key trends facing the industry are contained in our latest commodities white paper. An accompanying webinar also helped professionals understand today’s market dynamics and to harness the big data explosion.

Commodities trends

Having seen the commodities sector rally significantly in 2016, our survey found that market participants were ready to make big investments in data and tools during this year.

The Thomson Reuters Core Commodity Index rose 23.8 percent year-on-year in 2016 and the S&P GSCI index showed a rise of 44.2 percent.

Thomson Reuters Core Commodity Index
Thomson Reuters Core Commodity Index

Assets in energy, base metals and precious metals finished last year with gains of 50 percent, 31 percent and 11 percent respectively.

As 2017 progresses, a strong labor market and an upward trending inflation rate in the United States are expected to lead to a normalization of interest rates.

Fiscal stimulus among developed economies is growing and these developments should translate into increased demand for commodities.

Mushrooming supply

On the supply side, agriculture continues to see huge levels of production in major grains and oilseeds.

South America is likely to produce record corn and soybean crops while soybean acreage is expected to increase in the U.S., which could further exacerbate the world’s already mushrooming supply.

Base metals output is expected to increase, but these changes will be marginal as producers adjust to better prices and higher efficiencies.

Download report — Commodities markets: As the sector rallies, are you ready?

Supplies in the precious metals sector are forecast to remain under pressure across the board, reflecting some past closures and a lack of sustained capital expenditure.

With these changing market dynamics, executives are seeking more sophisticated analytics capability, driven by feeds and Enterprise Data Management (EDM) systems.

Discover a comprehensive picture of what is driving world supply in the energy and agriculture markets with Thomson Reuters PointConnect

Desktop or feeds?

Survey respondents continue to rely on tools such as pricing data, news, fundamentals, and market analysis and commentary. These remain their primary sources of insight, regardless of whether they use a desktop product or feeds.

Consistent with previous years, pricing topped the list when respondents were asked about the relative importance of specific tools and content requirements.

Results from 'Commodities markets: As the sector rallies, are you ready?' white paper
Results from ‘Commodities markets: As the sector rallies, are you ready?’ white paper

Discover intelligently linked information for all Thomson Reuters DataScope content with DataScope Select

Commodities professionals heavily rely on desktop solutions to meet their needs: over two thirds (68 percent) of survey respondents reported desktop usage, but desktop solutions alone are no longer sufficient.

To gain comprehensive understanding of market-driving information and uncover valuable insights, there is evidence that companies and professionals are investing across the board in feeds and EDM systems.

Over half of respondents (56 percent) have feed usage. EDM solutions are currently used to a lesser extent (37 percent), but usage appears to be growing as organizations seek to implement holistic information-management systems, without adding complexity or incurring significant cost.

Watch commodities data webinar — Are you ready for commodity market changes?

Data complexity

A desire to cut total cost of ownership, centralize data, reduce operational risk and create an analytics platform has driven the push towards EDM as companies want to manage growing complexity in data management.

Results from 'Commodities markets: As the sector rallies, are you ready?' white paper
Results from ‘Commodities markets: As the sector rallies, are you ready?’ white paper

Thomson Reuters Elektron is everything you need to empower your workflow and enhance your enterprise data management

The data available to analysts and traders grows exponentially and its composition continues to become more complex.

Information needs to be analyzed quickly and efficiently in this age of big data in order to maximize opportunities. Ensure you have the best technology to help stay ahead of the market.

At Thomson Reuters, this includes Eikon, PointConnect, DataScope Select (DSS) and EDM (Enterprise Data Management system or Data Warehouse).

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