Not a farmer, but I believe they use weather derivatives to hedge and weather forecasts for predictions? Going through markets for weather forecasts is adding a level of indirection that generates a noisier signal.
replyThe idea when hedging isn't to win on expected value. It's to reduce risk. You're paying the market to provide insurance.
As a side effect, insurance does sometimes generate interesting data. The insurance industry generates good data about life expectancy. But it doesn't tell you when you're going to die.
Good points, but commodity futures and stock prices take into account all sorts of information. They go haywire sometimes but given how hard it is to beat the market, they seem to do a pretty good job of aggregating it all.
replyAs we learn from reading Matt Levine, they might also be taking into account signals that are irrelevant to you for technical reasons, or just nonsense. Often it works well but sometimes you get meme stocks.
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