Best Agricultural Trading Firm (ABCD)
What is the best ABCD agricultural trading firm? This in terms of long term compensation, prestige, growth opportunities and long term resume build. Also is there a particular Agricultural product that is best to start with straight out of college or one to avoid? On another note perhaps a seperate topic but interesting as well - is Ag less "prestigious" or offer less long term compensation then metals/energy?
From what I’ve seen working at a major trading house, the physical cash trading makes very little money, and the cash guys are paid much less than the prop traders. Most of the profits come from understanding the physical to make money on the futures side by trading calendar spreads, crush spreads or trading the Chinese vs the Chicago futures.
With more and more algorithmic and quantitative trading, as well as the widespread availability of information, physical traders have lost the informational edge they once had and are struggling.
Personally I’d stay far away from agricultural commodities, the pay is substantially lower than energy and the outlook isn’t great
There is something to be said for this and I know Cargill distinguishes between traders (mostly paper I believe) and merchandisers (physical). But this is not just an ag thing. The adage that the physical pays for the overhead while paper is where you swing for the fences has been true for a long time in commodities. But the margins in physical have been steadily eroded and unless you are in a huge volume energy market, are sitting on an asset base, or doing something niche, it will be very hard to even pay for overhead (see Noble).
I worked at an ABCD for a few years and the above is definitely true. High 100s to low 200s is the average for a trader 10 years in. I think it’s improtant to manage expectations because a lot of people come in with unrealistic ideas of compensation and then are disappointed.
To make 400-700k or real money you need to get into a top seat at the commodity level such as head of grains trading USA. To get a seat like that you will need to play the politics right to outmaneuver 20 other intelligent people, will probably need 10 years of experience, and you’ll need to get lucky with the right seats opening up before hand to be in the position to get promoted. People stay in these seats forever so hopefully they retire or leave. Then once you’re in this seat, you not only need to trade extremely well, but you better pray that your assets make money that year. Then, you better pray that other commodities also make money and the trading house as a whole does well. A lot needs to go right for you to get paid and this isn’t a get rich quick career.
With that said, the work is intellectually challenging and your job security is very high for a trader. You’ll also be able to move abroad if that interests you
Went through a commodity training program @ ABCD. Still working at ABCD and have been here for ~3-4 years. Here's my $0.02.
Prestige/resume build/name brand - Cargill.
Growth Opps - think the ABCD's are pretty even here - mix of politics, personal ambition, having the right boss, ability to re-locate etc etc. Too many factors here to name one winner. High performers will be rewarded.
Long Term Comp. - Again tough to say. Out of the gate Anderson's, Scoular, Gavilon etc. have an eat what you kill culture still and you can make more if you're succesfull out of the gate (this is rare). ABCD's have structured training programs that are meant to build longer term merchants/traders & leaders. These companies love to promote from within and there is a ton of diff. areas and opps to make solid money.
Best Ag Products? - Might be biased... but soybeans/ oilseeds i find interesting and a very global mkt, where you can learn a ton about economics, politics, trade flows that are applicable across commodities. I also think the vegetable oils mkts are super interesting from a personal standpoint. (rape, sun, palm, soy oils etc).
Is AG less prestigious than metals/energy? - Interesting question. I don't know how to answer this but i'll give it a try this way. The avg ag trader will make less than the avg metals or oils trader. The avg ag trader will have a better work/life balance than metals/oil. Prob the best i can do to answer this question.
Any other q's let me know and i'll give em a shot