Best Internship for Future in Physical Commodity Trading
I am currently a sophomore at one of the better universities in Canada majoring in Economics. After many deep dives in WSO I began exploring the idea of trading physical commodities as a future career path. Unfortunately, the city where I live does not have an abundance of comm trading firms here (2 of the ABCDs have offices in the area with Glencore being close as well). While on WSO, I read that having a background in logistics is considered and asset, when trading physicals commodities. To cut a long story short, I have an offer to intern at a logistics firm this summer in dispatch. I plan on taking it but my parents have been urging me to try and get a job through my aunt who works at one of the big 6 banks. I have no idea what my position would be if I went there. It would most likely be something in mid office . All this being said, I was hoping someone with some background in the industry could give some advice on the subject.
Thank you
Any advice is welcome
You won’t be able to jump straight to trading based on the skills acquired during any internship, so you are probably looking at what gets you noticed for a grad program interview. In that case, I would just go for name recognition. Applying through a web portal black box with corporate HR as the gatekeeper will probably be easier if you had a summer as a JPM risk summer analyst than a small firm’s logistics desk. Also, if we are talking about logistics in an unrelated industry, bank risk management may be more relevant from a skill building perspective. Also better in general if plan A doesn’t pan out and you want to get a general finance job.
Hey thanks for the reply appreciate the insight. I should’ve probably mentioned it in my post but I’m aware I would not walk right into a trading role. I have been looking into Grad Programs to apply to after I graduate. I do agree with you, it will be easier to get into a grad program with the bank job. My only concern is that I say no to the logistics firm and I don’t pull through and get the job with the bank. Essentially one is a sure thing while the other I just have my aunt there and I feel as if that’s the equivalent of me saying fuck it and throwing up a Hail Mary. I’ve thought about potentially working at the logistics firm this summer and then trying to get a mid/front office role at a bank next summer. As for the logistics firm, they are a brokerage firm so they are not tied into a certain product. From my conversations with the people there, they seem to be heavily focused in soft commodities (Cargill is one of their biggest customers). Regardless, appreciate you taking the time for the response, I’m still applying for the bank role and will take it if I get it.
Thank you,
All the best
Sounds good- you are getting started so early so you should have plenty of time to rack up new experiences.
Know people who did internships at Barrick type places and banks. Front office bank jobs always best. Truly a lot will come down to your gpa and overall resume.
Most shops today look at resumes the same way as any other top trading program.
Hey, appreciate the response. I don’t think front office is possible this year but it’s good to know what is ideal for these shops. Thanks for the advice, will definitely take into account.
Thank you,
All the best
Even post the decline of BB prop trading?
The decline stopped in q3 2020 and banks do not need to "prop trade" to make money in commodity markets these days. There is a bit of "vol" that customers (end-user/producers) need help with.
No one should sleep on the banks these days, as Rotterdam mentions you are going to learn more "real skills" in a logistics role just due to how a bank is structured vs a logistics firm but again we talking how to get the gold plated resume.
dumb question, but I find banks to suck in terms of the physical molecule/barrel understanding of the market.
Why would someone want to go to a bank over bp/vitol/etc?
Depends what you want to do. Out of my master's I had offers from a BB on one of their commodities desks and an offer from a physical trade shop like you mentioned. I took the physical offer because of how much more you learn about the entire industry and looking back I think it was a great choice. Some people just want to trade paper though and do what banks do. The jobs are totally different from one another though and really only share a few common threads between them. The day to day though couldn't be more different so it really just depends on what you want to do and where your interests are.
Truly not a dumb question but its harder truly as its more case dependent. The major advantage of a bank is they would run possibly more lean and they are not going to hire someone who does not get flow pretty much always, so you are going to get closer to the actual business a lot faster. Their job is not to understand "physical settlement" truly its more to understand and guide customers on flow.
Then comparing Vitol to BP is tough in general, cause Vitol could see a lot of advantages to hire a bank guy while a BP could see it more limiting. So it depends on the product/desk/etc.
Basically after Q3 2020, commodities attracted one HNW dollars that wanted to exposure and two "energy transition" has created issues for various customers in Energy/Metals and well as we are seeing even in Ags. Banks are well suited for these times since they have expertise somewhere in each area, easier financing and broad approach to everything. While I may need to goto XYZ for my metals issues, ABC for energy and etc...
Depends on what the bank job would actually be but if you're set on physical trading in the ag space then I would take the logistics internship. That is better than some random job in a banks middle office that doesn't have anything to do with trading. Like others said though, if that bank internship would be related to risk/trading then that is different. Take the job at the logistics firm and leverage that network to get to know the people at Cargill/other trade shops if possible.
Best story I ever heard like that was a guy that interned at a recruiting agency that specialized in commodity trading placement. Used the summer to meet a couple people at a trade shop, leveraged that into an internship there the next summer, used that to get on full time, and now 4 years later he is a trader at Vitol/Trafi/Glencore.
Honestly I think the most important thing to have when recruiting ( I guess in general) would be to have a good story you could tell which is somewhat related to trading or the commodities industry. While of course a good gpa and the experience on your resume takes you far, I think a big part of it comes down to likability. As mentioned before in these threads I feel like the commodities business cares much more about your drive/motivation rather then what school you come from.
You could have a great story but an average CV wouldn’t get you a foot in the door to tell anyone.
Even though the logistics job would give you more relevant experience, I would say it’s a higher chance the banking name would get you a call back from a trading house.
But obviously not a trade settlement or corporate actions analyst role at a bank.
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