Prospects of agricultural and soft commodities

what's the prospects of ags and softs traders compared to the oil, lng or gold guys? is it underrrated at the moment? those in this field please share! thanks

 

I'm in commodities (not ags/softs) but those can be some pretty good markets from what I can tell. Cargill/LD are both still private and virtually any ag product is bound to see its day in the sun at one point or another, and these are products you should be able to trade for an entire career.

Fwiw, Glencore's ag division killed it last year and they're not the first division you would think of there.

 

I'm in ags right now. I think the fact that Vitol, Mercuria, and Trafi are all growing their presence in ags should be an indicator of the industries prospects. I have several friends who have jumped from oil into ags. it's certainly a growing business with more and more opportunities. For a young guy with interest in physical commodities, I'd say jump at any opportunity to get into the business.

 
CAbeachbum:

I'm in ags right now. I think the fact that Vitol, Mercuria, and Trafi are all growing their presence in ags should be an indicator of the industries prospects. I have several friends who have jumped from oil into ags. it's certainly a growing business with more and more opportunities. For a young guy with interest in physical commodities, I'd say jump at any opportunity to get into the business.

hi there

do u mind sharing more abt yr job? like how's a typical day like, the challenges u faced

 

You ask me, it does not matter that it is the softs desk, it is commodities. Some people believe that the next agricultural bull market is beginning, but even if it does not you can probably move to another commodities desk like you wanted in a year or two. Also, places that get a lot of cash from prop usually allow their traders to expand into different product areas once they prove themselves so you could do oil futures or FX futures.

"Greed, in all of its forms; greed for life, for money, for love, for knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA."
 

Commodities have waaaaaaaaaaaaaaaay more edge than FX, which is forced to do absurd size to get anything unless you are maybe doing some OTC flow for people looking to get their hedge--even then, not that amazing compared to some. There is nothing wrong with agro at all and it isn't a bad spot. It may not sound sexy to your friends, but if you are more about the experience and making money, then that shouldn't be an important factor.

You should want something that has a lot of trade, which the grains and softs most definitely have.

 

lol why is it assumed that it is a great area to be in just because prices went up? Some MM desks blew their accounts on the big moves there. You don't need the underlying to go up (or down) to make money and a lot of firms aren't making money primarily off their vanilla longs. You want stuff that has a lot of 2 sided trade--even if you are making prop trades. There are a lot of products that have been going up that have horrible trading environments (no liquidity, highly changing volatility, etc.).

 

Some more details on the type of trading you would be doing would be important. There are people that can bounce around groups because their strategies and trading styles are more general, while others tend to specialize. A managing partner of one of the biggest/well known props traded everything from FI to equities to the VIX and oil and his firm tends to have people move around a good bit as well.

 

Actually, I think this kid might be right. I know the desk I was on this summer (BB commodities) is specifically targeting schools with ag econ programs this year, then again, they are trying to build out their ag desk. If you could pair that up with a statistics, math or comp sci background and get some experience in trading, they'd probably be wet just looking at your resume.

------------------------------------------------------------------ "I just want to be a monkey of average intelligence who wears a suit. I'll go to business school!"
 

I still have a couple more days to decide, and I deleted some info that I didn't feel too comfortable disclosing before signing anything official. Part of my concern has been that this specific trading position won't require that much of quantitative skills - I will be spending much more time reading WASDE and USDA report than doing any numerical analysis, which can be both good and bad. So I guess I wanted to hear about this aspect of trading, and whether it's really an added benefit (as MarkyMark pointed out) to be a bit of everything, or not.

 
yellowpunch:
I still have a couple more days to decide, and I deleted some info that I didn't feel too comfortable disclosing before signing anything official. Part of my concern has been that this specific trading position won't require that much of quantitative skills - I will be spending much more time reading WASDE and USDA report than doing any numerical analysis, which can be both good and bad. So I guess I wanted to hear about this aspect of trading, and whether it's really an added benefit (as MarkyMark pointed out) to be a bit of everything, or not.

I've gotta totally disagree with you here. The ags guys that I knew were some of the strongest quantitatively on the floor, doing extensive analysis of correlations between different different ags and different commodities (i.e. how much the price of oil and refined products will affect the price of corn for ethanol) and how rates and the money supply effects how much pension funds shove into and out of the commodity markets. The market is incredibly dynamic and one of the most volatile out there (not as crazy as power though).

If I were you, I wouldn't be worried about that as much as I would about Fin Reg fucking shit up for banks trading in the ag space, that is, assuming your offer is at a bank. If not, I think you're in an even better position, because if Fin Reg pushes banks out, there is going to be even less liquidity in an already extremely volatile market, and chances to make money if you really know what you are doing will abound.

Just my two cents.

------------------------------------------------------------------ "I just want to be a monkey of average intelligence who wears a suit. I'll go to business school!"
 

Hello there! This is an old thread but I hope someone will respond. I am thinking to change my career path and join agri. trading house. Long story short - Last year was working on a consulting project and became super interested in trading business few days ago just received an offer to join a trading house. Are there any (EU) agri. traders willing to share some insights, future developments, etc. Thanks!

 

I'm at an ABCD in the US and can speak to that. I think GMG is in Europe? They might be able to speak about that market more specifically.

What exactly do you want to know? Trade war is making things pretty volatile this year. Could be good (ADM killed it on earnings). Could be bad (Bunge keeps getting its ass kicked). Lots of uncertainty with US Ethanol and the RFS. Drought in Europe and frost in Australia are flags to overall feed supply. Meanwhile the economy is expanding at a pretty good rate and economic growth correlates strongly with consumer demand for higher protein diets meaning continued, expanding, demand for feed. I'd say after a few really boring, low volatility, years with oversupply, this year has been pretty interesting.

As for long term prospects, people gotta eat.

 

ABCD in North America here. I'd be happy to answer PMs on specific questions about the industry and firms. I can say that the Black Sea region is a definite point of interest for many in the EU grains trade at the moment.

 

Thanks for interesting replies. I just returned from Ukraine - it is "Wild West" there. Although my visit was not connected to ag. business I think that the country is in a big mess and you must have nerves of steel, good connections and deep pockets to operate there. Romania and Russia from the Black Sea region should be friendlier I think.

BTW Does anyone have some info or could comment rapeseed trends in the global markets - very interesting to hear some thoughts on this specific commodity.

Alright, I can conclude that ag. trading is getting interesting (again) after a few boring and low volatility years. The industry is going/went through some changes due to supply gluts, low prices, increased economies of scale in farming, etc... Entering niche markets i.e. "gluten free" or finding other less commoditized ag. products could be something to look at in the future otherwise you will be dealing with more or less low margin deals. Potential mergers and industry consolidation (Glencore-Bunge, Cofco-Nidera), development of new regional partnerships and specializations (BayWa bought some smaller trading houses in Netherlands and Germany, Ameropa investments in Romania) and further vertical integrations is something which will mark the broader corp dev. trends across the ag. trading spectrum. I am still not sure if the industry is as attractive (money wise) as it was before but people still need to eat, so the future for ag. traders is not dark. Will you still decide for the ag. trading career path or rather look somewhere else if you will start in 2018 ?

BTW any comments on Dreyfus's CEO resignation ?

 
Most Helpful

Ags/Softs is great, good work life balance, good reward, interesting markets and in general we see good volatility. I have worked across grains/oilseeds/softs at two trading houses, on an EU level and global level.

I know Glencore has one of he biggest presences in wheat (specifically EU and Russian, but with the acquisition of Viterra, Canada too).

Cargill are having a stellar year with regards to trading after a few years of reorganising.

On Rapeseed, I am not overly in touch with the market anymore, but EU crop has suffered due to weather and same for AUS. However the key thing to consider when it comes to rapeseed/canola complex is how it interacts with the soybean complex.

Rapeseed/soya oil compete into biodiesel, feed and food industries, while rapemeal/soyameal compete into the feed industry, the way the seed/meal/oil interact to produce the crush margin is crucial.

LDC having a tougher year from what I hear.

 

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