You are here

Traders now pay close attention as farmers become live-streaming stars

In China, where Twitter is banned and commodity production and stockpiling are a mystery, streaming apps are an additional information source

Hong Kong

STREAMING apps have taken China by storm with short videos of dancing teens lip-syncing and getting into all kinds of weird antics.

Now traders are using these videos to predict the future of grain prices by watching a whole other demographic. For example, a farmer in the rural north-east is using his phone to film trucks lining up to load corn. In Shenzhen about 3,000 km away, trader Honda Wei watches attentively, scrutinising what the farmer is saying and the images of his fields for supply-demand clues.

The 33-year-old said of his experience on the Kuaishou app, a short-form video platform backed by tech giant Tencent Holdings Ltd: "It provides intuitive information about the domestic markets. Traders are seeking links between farmers' sentiment and futures price fluctuations."

sentifi.com

Market voices on:

With more than 700 million users combined, Kuaishou and Bytedance Ltd's Douyin offer a vast potential source of intelligence in an opaque Chinese market, where government data isn't always the most reliable or efficient. Along with social media such as Weibo, traders are gathering information on crop plantings, harvests, stockpiles and sales in real-time, instead of the hours of telephone surveys and physical travel that were once necessary.

Zhang Yan, an analyst with Shanghai JC Intelligence Co who subscribes to users on Kuaishou, said: "The trading community monitors farmers as their sentiment spreads on social media."

While traders internationally have used Twitter to track opportunities, acting on everything from refinery fires and ship groundings to equity market sentiment, it is not an option in China, where the US-based social network is blocked.

In their thirst for data, many in China have turned to streaming apps which feature clips in which farmers film themselves to connect with others and help improve productivity, manage costs and maximise profits. That trend has been helped by changes in the domestic market for commodities.

In 2016, the country abolished its corn stockpiling programme in the north-east to let the market decide prices. Rather than buy up production, the government now gives subsidies to farmers to encourage them to plant crops. Yields in China are restrained by curbs on genetically modified varieties and limits on land transfers, which all add to the sensitivity of the domestic market.

The mysteries of production and stockpiling in the top commodity buyer have confused traders and analysts and roiled global markets. Corn swung widely in November as the US Department of Agriculture revealed huge changes in world inventory figures after China adjusted statistics for the past decade. This has led to disseminating and collecting of information on social media.

"Quite often, you'll have farmers selling the same kind of product from different regions becoming friends," said Zhang Xiaoran, a director at Kuaishou's corporate social responsibility unit. "Farmers share information about production and many sell crops for each other."

As benchmark corn prices in China surged to their highest in more than three years in November, traders with industry giants such as Archer-Daniels-Midland Co, Cargill Inc and Cofco Corp started sending videos to each other. There was a correlation between clips showing hoarding by farmers with actual price movements, which was enough to spur app installations by traders.

Kuaishou, which gained a reputation for stunts performed by streamers, was one of the first to focus on growth in lower-tier cities and rural areas. That helped it become the streaming app of choice for farmers, with the rise in smartphone use.

This has given it a first-mover advantage, said Julia Pan, a Shanghai-based analyst at UOB Kay Hian Holdings Ltd. "They initially had a batch of live-streamers who did some pretty dramatic videos on their platform and became popular among people living in rural areas. It's hard to turn what farmers say in videos into a comprehensive database, but it does act as an extra source of information." BLOOMBERG