CHICAGO - The worst U.S. drought in a half century is bringing tech-savvy crop forecasters and fund managers back to the farm tradition of walking field rows to assess damage in the world's top grain exporter.
A record number of traders, seed dealers and government researchers have signed up for a first-hand look at corn and soybeans on the four-day, seven-state tour next week organized by Pro Farmer, the agricultural advisory firm. Demand was so strong that eight people who signed up late are on a waiting list.
Tour members want an on-the-ground look at the crops as new technology like satellite imagery was slow to detect a turn in conditions earlier this summer. In other words, in times of crisis nothing beats getting your hands dirty and your feet wet.
"Unless you're going out or you're sending somebody out to look at the crop, you're no smarter than anybody out there," said Chris Myers, the principal of M6 Capital Management, a commodity trading advisor that will send a new employee on the tour.
The tour, which sends participants into thousands of fields to manually count corn ears, kicks off on Monday and will provide its final national estimates of corn and soybean yields on Friday.
Some, like U.S. Department of Agriculture employees, will tag along to help check their own estimates; others, like independent trader Charlie Schramer, will have a more material objective.
"I'll be trying to trade once we get to the hotels" after finishing field surveys each day, he said. "Most likely, I'll be trading overnight and what I can during the day."
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This year, the early start to hot, dry weather that has decimated crops made field surveys the leading indicator of damage, analysts said.
Satellite imagery, a premium product for food companies and funds, did not detect problems right away because there was a period of time when images showed plants were turning green, as they typically do in early stages of development, said Corey Cherr, agriculture research manager for Lanworth, a private analysis firm that uses satellites as a forecasting tool.
Lanworth is a unit of Thomson Reuters.
It was not until later that images began picking up on signs of stress, he said.
Sky-high imagery can fall short in estimating yields because it provides a view of the crop canopy and does not actually delve into the crop to count, say, the number of corn ears.
"The field work was the first place we could confirm the really severe problems," said Cherr. "The imagery was used later as kind of a way of actually checking the field work."
Lanworth, which plans to send four people on the Pro Farmer tour, uses a combination of satellites, ground surveys and weather models to estimate how much farmers will harvest.
The company, like many others, has conducted independent surveys for much of the summer.
Last year, satellite imagery showed crop losses more quickly because damaging heat hit later in the summer, after plants had already gone through the early stages of development, Cherr said.
"One thing we've learned over time is that although data doesn't lie, sometimes data is incomplete," he said.
The stakes in obtaining a complete understanding are high this year. Corn and soybean prices are near record highs reached earlier this summer as steadily deteriorating crop conditions raised fears about shrinking supplies.
"Some of this crop will be destroyed before we even get a look at it," said Mark Bernard, an agronomist for Agro Economics and tour consultant for the eastern leg of the tour. "How we are going to handle that, and what kind of impact it will have on our results, will be huge."
Reports from participants on the Pro Farmer tour, who are known as crop scouts, can have an immediate impact on grain prices, particularly if they uncover conditions that are better or worse than expected.
RCM Asset Management is sending two employees on one leg of the tour that starts in South Dakota and ends in Minnesota, and instructed them to send daily reports and videos from the fields back to their office in Chicago. The information will be posted online and sent to clients.
Employees of the firm participated in another corn and soybean tour earlier this summer to see crop damage up close.
"We're pretty bullish the markets," said Bob Schroeder, RCM's head futures and options execution broker. "Anything we can get to reconfirm that, all the better."
Other participants include employees representing big financial names like Soros Fund Management, Tudor Investment Corp and grain trader Glencore.
A second leg of the tour begins in Ohio and ends in Minnesota.
To be sure, crop tours have their shortcomings, and their results are often taken with a grain of salt. Inexperienced crop scouts can potentially skew results.
Still, the tours are seen as an important counter-balance to government field surveys conducted by the USDA.
The department uses its own surveys to calculate monthly estimates for corn and soybean production, with its next report due on Sept. 12.
Six USDA employees are registered for Pro Farmer's tour.
"No one is going to complain about another crop tour," said Charlie Sernatinger, analyst for ABN Amro.