A Role for Social Media?

Social media have become a very popular medium and arguably a relatively untapped source of potentially useful intelligence for commodity businesses. Twitter and industry expert blogs are already utilized in other asset classes, such as equities, to provide traders with both trading signals and sentiment analysis. Unfortunately, the flood of data and information pouring onto and out of platforms such as Facebook and Twitter – with the vast majority of it being nothing more than “noise” comprised of uninformed opinions, unfounded rumors, and personal experiences – can limit its appeal and usefulness to commodity trading professionals. However, given the ubiquitous nature of social media, its potential value cannot be dismissed. Social media, is now, in almost all cases, the first source to identify events or trends that could impact demand or availability of commodities – such as localized severe weather events and other emergency conditions tweeted by residents or first responders. Events such as industrial accidents, civil unrest or transportation disruptions in a producing area can impact commodity production, deliveries or demand…with knock-on effects on price movements or contractual deliveries. Recognizing the potential value of social media as an information source, there are a number of companies offering social media… continue reading
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