What Earth Observation Data Is
Earth observation (EO) encompasses all data acquired by sensors on orbiting platforms. The modalities differ in what they measure, when they can measure it, and what they reveal.
| Modality | Sensors / Missions | Resolution | Key Property |
|---|---|---|---|
| Optical (multispectral) | Sentinel-2, Landsat 8/9, Planet SuperDove | 3–30 m | Reflectance in visible + NIR bands; cloud-dependent |
| Synthetic Aperture Radar (SAR) | Sentinel-1, ICEYE, Capella Space | 1–20 m | Microwave backscatter; day/night, cloud-penetrating |
| Thermal infrared | Landsat TIRS, ECOSTRESS, VIIRS | 60–375 m | Surface temperature; detects industrial activity, fires |
| Hyperspectral | PRISMA, EnMAP, Pixxel Fireflies | 5–30 m | 100+ narrow bands; mineral/crop species identification |
| AIS (ship tracking) | Spire, exactEarth, Orbcomm | Ship-level | Maritime vessel identity, course, speed, draft |
How Satellite Data Informs Commodity Prices
The connection between orbital imagery and price discovery is direct. Every physical commodity has a spatial footprint that satellites can measure before the market knows.
Crop Yield Estimation
NDVI (Normalized Difference Vegetation Index) time series from Sentinel-2 track photosynthetic activity across growing seasons. A fund monitoring NDVI for the U.S. corn belt at 10m resolution sees drought stress 4–6 weeks before USDA crop reports. The signal is in the deviation from the historical NDVI curve for a given county and growth stage.
Oil Storage Monitoring
Floating-roof crude oil tanks cast shadows proportional to the volume stored. SAR imagery measures these shadows regardless of cloud cover. Orbital Insight and Kayrros process imagery of Cushing, Oklahoma and the SPR to estimate U.S. crude inventories before EIA reports. The edge: weekly global coverage vs. monthly national reports.
Shipping and Maritime Intelligence
AIS data from satellite constellations (Spire operates 100+ nanosats) tracks every commercial vessel globally. Combine with SAR for dark-vessel detection (ships that disable AIS transponders). Applications: crude oil tanker tracking for supply flow estimation, iron ore fleet monitoring, grain shipment routing from Black Sea ports.
Mining Output and Industrial Activity
Change detection on mine sites reveals expansion/contraction of operations. Thermal imagery detects smelter activity. Nighttime light intensity (VIIRS) correlates with industrial output. Chinese factory activity was tracked via NO2 emissions (Sentinel-5P) during COVID lockdowns before official PMI data.
Deforestation and Carbon Credits
Forest cover change is the basis for REDD+ carbon credits. Monitoring deforestation with SAR (cloud-penetrating, critical in tropics) allows verification of carbon credit validity and detection of fraudulent offsets. The voluntary carbon market trades ~$2B/year, and satellite verification is becoming mandatory.
Hedge Fund and Private Equity Usage
| Firm | Approach | Edge |
|---|---|---|
| Two Sigma | In-house satellite data team; automated ingestion pipelines | Processing speed, cross-signal integration |
| Citadel | Satellite + alternative data division | Scale of data fusion across modalities |
| Point72 | Cubist Systematic (quant arm) uses EO data | Systematic signal extraction, backtesting infrastructure |
| Man Group | AHL quant fund integrates satellite-derived features | Time-series modeling of physical signals |
The alpha is not in access. Sentinel data is free. Planet offers daily global coverage at commercial rates. The alpha is in processing speed and domain-specific interpretation. A fund that can go from raw imagery to a tradeable signal in hours has an edge over one that takes days. A team that understands the agronomic meaning of a NDVI anomaly has an edge over one that treats it as a generic feature.
Private Equity Due Diligence
Satellite data verifies claims that management cannot obscure:
- Factory output: truck traffic, parking lot occupancy, loading dock activity
- Retail foot traffic: car counts at store locations over time (RS Metrics)
- Construction progress: compare site imagery against project timeline claims
- Environmental compliance: detect unreported emissions, waste, or land use changes
Technical Pipeline
The end-to-end flow from satellite to trading signal follows a consistent architecture:
| Stage | Process | Tools |
|---|---|---|
| 1. Ingest | Download imagery from provider APIs; manage tile catalogues | STAC API, Planet SDK, Copernicus Data Space |
| 2. Preprocess | Atmospheric correction, orthorectification, cloud masking | Sen2Cor, ACOLITE, s2cloudless |
| 3. Feature extraction | Compute indices (NDVI, NDWI, BSI), segment objects, detect changes | rasterio, scikit-image, custom CNN/ViT |
| 4. Embed | Generate vector representations of image patches or time series | SatMAE, Prithvi, domain-specific encoders |
| 5. Vector search | Find similar historical patterns; anomaly detection against baseline | Qdrant, FAISS, pgvector |
| 6. Signal generation | Convert anomalies to directional signals with confidence scores | Custom models, ensemble methods |
| 7. Backtest | Validate signal against historical price data; measure Sharpe, drawdown | zipline, vectorbt, custom frameworks |
Key Providers
| Provider | Coverage | Specialty |
|---|---|---|
| Planet Labs | Daily global at 3m | Highest temporal cadence; SuperDove constellation |
| Maxar | 30cm resolution | Highest spatial resolution commercial optical |
| Spire Global | Global AIS + weather | Maritime tracking, GNSS radio occultation |
| Orbital Insight | Analytics platform | Oil storage, economic activity indices |
| Descartes Labs | Analytics platform | Crop forecasting, supply chain monitoring |
| RS Metrics | Analytics platform | Retail foot traffic, metal inventory monitoring |
| Kayrros | Analytics platform | Energy market intelligence, methane monitoring |
| ICEYE | SAR constellation | Sub-daily SAR revisit; flood, infrastructure monitoring |