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Background
While working through the task
Inspect the Traps, you'll notice that one of Morell's traps doesn't have any locusts in it. After completing the task, if you pass an Interfacing check while talking to Morell (#1), then you'll float the idea that maybe the Insulindian phasmid didn't eat the locusts; maybe Cuno stole them. This will trigger the task.
Walkthrough
When you ask Cuno (#2) about the locusts, he'll "lawyer up" and refuse to tell you anything. To learn about the locusts, you'll need to enter his shack (#3), which means you might need to pass a Perception check to detect the entrance. Inside the shack, you'll find locusts all over the place. When you return to Cuno and confront him about this, he'll get all excited about his Locust City, and you'll be able to encourage him to pursue art (which can help you unlock the thought
Actual Art Degree). But eventually Cunoesse will convince Cuno that the locusts are lame, and he'll lose interest in them.
When you return to Morell (#1) and tell him what happened, you'll complete the task and earn 30 xp. But Morell and his wife Lena will sound like the search for the phasmid has finally worn them down, and that it might be time to give up. If you offer to keep helping them, then you'll trigger the task
Find the Insulindian Phasmid. If you refuse to help, then Morell and Lena will return home to Jamrock, and they'll disappear from the game.
1 - Whirling-in-Rags
2 - Cuno
3 - Cuno's Shack