Maximizing Profitability with AI/ML-based Commodity Price Forecasting
Commodity forecasting has long been a crucial undertaking for organizations whose operations depend on raw resources. How precise these forecasts are can have a significant impact on an organization’s revenue. The advancement of artificial intelligence (AI) and machine learning technologies has improved commodity forecasting, enabling businesses to lower risks.
Businesses may reduce risk and make better decisions when forecasting commodities with the aid of AI and ML. AI and ML systems collect, analyze, and act upon large volumes of data, taking intelligent action. AI has been able to spot trends in price variations by examining past data on commodity pricing and using statistical models. This has helped businesses decide when and where to place orders for commodities from suppliers. Businesses may improve operations and better fulfill client demand with the aid of this data-driven forecasting.
Artificial Intelligence/Machine Learning used for commodity forecasting
Commodity forecasting uses AI/ML to analyze past and real-time data to recognize trends and patterns that can be used to predict future commodity prices. Some AI/ML applications for commodities forecasting include the ones listed below:
- Data gathering and processing
AI/ML algorithms can collect and interpret a lot of data from various sources, such as financial news, weather reports, and social media, to offer a holistic picture of the market.
- Modeling that Predicts
Using current and historical data, machine learning algorithms assist in the construction of predictive models that calculate commodity prices in the future. Developments in the marketplace or other possible effects on commodity pricing can be accounted for by altering these algorithms.
· Risk assessment
AI/ML can be used to analyze the risk associated with buying a certain commodity. This methodology can be used to determine the probability of a decline in commodity prices and the necessary mitigating actions.
- Sentiment analysis
AI/ML might look at social media posts and news stories to determine how the public generally feels about a certain product or service. Traders can utilize this study to comprehend the viewpoints of market participants on the commodities and potential future price adjustments.
By using forecasting analytics, AI/ML can decide when it is optimal to buy and sell commodities, reducing the likelihood that a mistake will be made.
Advantages of commodities forecasting based on AI/ML:
· Risk Mitigation
One of the key advantages of AI/ML-based commodities forecasting is its capacity for risk mitigation. Many variables, including supply and demand, the environment, geopolitical events, and others, affect the price of commodities. Businesses can reduce the risk of losses by using accurate forecasting to better understand these issues and modify their tactics. Moreover, organizations can get significant insight into market situations with AI/ML-based forecasting, allowing them to react to changing conditions swiftly.
· Enhancing Decision-Making
Enhancing Decision-Making: Businesses may make better decisions about whether to buy or sell commodities by giving them precise and up-to-the-minute market knowledge. This can aid companies in maximizing gains and reducing losses. Moreover, AI/ML-based forecasting can give companies an edge over rivals by enabling them to take quicker and more precise decisions.
· Cost Savings
Commodity forecasting powered by AI/ML can potentially result in cost reductions. By enabling them to more accurately predict demand and change their output in response, accurate forecasting may assist firms to streamline their processes and cut waste. Also, organizations can save resources that would have been spent on policy or other ways to mitigate risk by lowering the likelihood of losses.
Best practices for commodity forecasting with AI/ML
· Selecting the appropriate data and models
Choosing the appropriate data and models is one of the most crucial aspects of AI/ML-based commodities forecasting. The accuracy, relevance, and timeliness of the data utilized during the forecast model must be guaranteed. Furthermore, the models must be suitable for the particular commodity being projected and be able to take into consideration any pertinent market conditions. It could be important to employ many models, keep track of their progress, and modify them as needed as market circumstances shift to assure accuracy and dependability.
· Working together with Subject Matter Experts
These can include statisticians, economists, and other specialists with an in-depth understanding of the commodities market. Businesses may recognize possible threats and opportunities, obtain a full grasp of economic conditions, and create more precise forecasting models by collaborating with professionals.
· Providing accountability and transparency
Moreover, it is crucial to guarantee accountability and openness in the estimation methods. As well as making sure stakeholders are aware of the predicting approach and data sources, this calls for making the prediction accountable and subject to criticism. Also, companies should constantly check and assess the reliability and accuracy of their forecasting systems.
Commodity forecasting powered by AI and ML has emerged as a key tool for organizations to reduce risk. Going ahead, the potential of AI/ML-based commodities forecasting is hopeful as businesses grow more skilled at leveraging it to make educated decisions. Pricevision is here to get you started with the powerful AI/ML based commodity forecasting.
About Price Vision:
Price Vision is an AI/ML based commodity price forecasting solution from ThouCentric Labs to ensure businesses have accurate and interactive forecasts. From agri to non-agri products, Price Vision helps predict future demand for every product and get real-time insights to let retailers be more competitive. It enables smart and profitable business decisions by generating price forecasts on a daily, weekly, and monthly basis.
•Validate your analysis through charts and technical analysis.
•Save money by avoiding losses and missed opportunities.
•All major commodities are supported.
•Forecasted prices for all geographies
•Easy-to-use data drivers
•ML-based price prediction
•Broader horizons for forecasting