Physical sugar trading
After a few searches on WSO, I have the impression that there is no topic fully dedicated to physical sugar trading.
To be short, I am an european student, I graduate from top Universities in law then in finance and thanks to my interest for commodities, I'am going to start an internship in physical sugar brokerage in a few days.
To this end, I understand that sugar trading is mainly driven by its fundamentals as : meteorology, ethanol, dollar value. Also, it seems that if conjoncturally climatic disasters in producing countries can generate imbalances on the physical market which can be profitable from a trading point of view, there is however a structural drop of demand with respect to health policies, new habits toward nutrition mainly in occidental countries.
From this perspective, I would be glad to receive the point of view from people in the soft commodity industry or others whom have an interest for the topic.
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Considering these structural changes, do you think that there are still opportunities on the sugar market in the next fifty years ?
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It seems that the cocoa market is going to boom in the next decades with the rising demand of asian countries. Perhaps I should try to switch on the cocoa market after my internship or even in the coffee market, I have been captivated by the posts of @coffeetrader and the coffee market seems quite exciting with a real mearchant spirit in companies such as Sucafina, Volcafe (ED&F man) following the mantra : "volume is vanity, profit is sanity and cash flow is reality". Do you think that the cocoa or coffee market could be a clever move ?
From a corporate point of view :
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What do you think of the companies like Sucden, Czarnikow, Alvean, Wilmar in the scope of physical trading ?
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Are these shops a good place to start in the industry or it's better to embed a graduate at an ABCD to learn and then switch to one of these shop ?
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Which of the physical sugar trading firm has the most "mearchant" spirit ?
Thank you in advance for your contribution.
Take this with a grain of salt (as opposed to sugar) as I'm in metals, but as someone who finds the softs industry really interesting here are some things I have gleaned from reading Kingsman or other people in the field.
This is the million dollar question, and I don't have an answer for it. A structural decline of sugar demand does seem plausible and that's never what you want to see for your commodity. However, given how political sugar production (see for instance EU quotas and their lifting), and the impact of weather, there will be wild swings in the future.
Sugar does seem like a rough market at times. The "physical pays for the paper trading" model is not sustainable and there are a lot of decent size players in the market. ED&F Man's sugar business has been doing terrible for the past few years and they are one of the most historic traders out there. But you can say stuff like that for any commodity at various times. Coffee's biggest buyers are concentrating and asking for 120 day terms while the specialty segment has a bajillion trading houses involved. Cocoa is interesting in that the trading/processor side is very concentrated while the swings have the potential to be insane. Seems like over a course of a 20 year career, if you are at the right place at the right time you could have an absolutely monster year that will allow you to retire.
All very reputable shops. Czarnikow comes from the brokerage side, they seem to be very cautious in their approach (not necessarily a bad thing). Alvean is supposedly the biggest player on the block right now. If you look at people's bios in the field seems like a lot of people float between all these shops.
I think if you want to do softs, might as well go for it. As far as sugar, Cargill/Alvean seems like a place that's relatively safer to be but beyond that, I'm not sure it's so different from the rest.
No idea, ED&F Man and Sucden have the longest history in the sugar merchant space (and Czarnikow for brokerage) whatever that might imply. That's a good question though.
In metals like above, though I suspect not in the same capacity. GoodBread has given solid adivce. Know a few in agris. Not sure if I can add much
1. Agree on above. I think this is a question over-asked somewhat...there's still going to be coal opportunities in 50 years for example. Even if it shrinks, there's ops and transferables.
2. Agree on above fully.
3. can't speak to it.
4. In general, people start at big shops and then move smaller. Unless they let you run risk early, in which case risk is the preference.
5. no idea.
1) The opportunities are going to look very different. If you're open to adapting and not dead set on being a "pure merchant" so to speak, I wouldn't be too concerned.
2) I would choose either cocoa or coffee over sugar personally as there seem to be more interesting opportunities on the consumer side if I ever decide to switch industries. I agree that coffee seems particularly exciting, but I think it requires genuine passion and a strong desire to spend years at origin (also, ever see the coffee guys on LinkedIn? they look pretty happy and are always posing with their beans/farmers)--this is probably true across softs though.
General advice for recruiting: I wouldn't spend too much time comparing firms right now. Just apply to any and all available roles, because it's highly unlikely that you'll be in a situation where you get a trainee role from each of those firms. That's partly because not all of these companies post trainee roles yearly, partly because even if they do they may not be in a region you're eligible for. And all the firms you listed are strong. So I would advise you come back later when you have a few offers in hand. Good luck.
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Bumping this for a 2023 update by either @GoodBread or NA. I'm sure lot has changed.
interesting sugar market atm with prod from india and large phys delivery/premium for oct
You often hear people saying that declining demand for a commodity isn't good for traders but I think an argument can be made that in the medium term it could actually be a really good space to enter. Declining demand is going to lead to declining production and companies leaving the space. This leaves prices much more susceptible to shocks which we all know leads to more trading opportunities. It isn't as black and white as a lot of people portray it to be.
Like coal?
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