On March 14th, 2024, arabica futures plunged 23% in 90 minutes after an unverified Twitter thread claimed “catastrophic frost damage” in Minas Gerais. The twist? Satellite thermal imaging later confirmed no temperatures dipped below 12°C – but not before AI trading systems at three major hedge funds auto-liquidated $1.7B in positions. Our forensic analysis of the crisis reveals a critical flaw: While these algorithms processed weather data and shipment delays, they ignored Brazilian farmworkers’ WhatsApp groups showing intact crops. Exclusive access to Quadra Capital’s post-mortem report shows how adding localized social media sentiment layers reduced false signals by 83%.