Physical Trading: Best commodities to be in?
Hi all, I'm a long time lurker on this forum but I've benefited a lot from all of the discussions surrounding physical trading. Currently an undergrad with internship experiences in Base Metals and I'm looking to apply for grad positions as an entry-level scheduler/junior trader soon.
My question is this: for those in the physical space, given your long-term view of where different commodities are headed, what commodity group (Energy/Metals/Ags) do you think offers the best opportunities for those coming into the industry?
By this I mean the kind of product groups best poised to benefit from upcoming trends in the world, those with the greatest potential for interesting work, and miscellaneous considerations like comp and likelihood of getting a trading position.
Would really appreciate some advice on this - thanks!
For energy. NGL imo
NGL's are predicted to see the most growth over the coming years.
There have been billions of dollars invested in steam crackers and petchem facilities throughout the US. These facilities are going to need NGL's to feed them and then on the other side of that they are getting built for a reason - demand. As this demand continues to rise and infrastructure is being built out there is most likely going to be quite a bit of volatility in the market. On top of that, energy trading typically pays more than other industries such as ag (there are obviously people making very good money in all types of physical trading. I am just speaking generally for non-trading roles).
who on earth hit me with monkey shit? that's horrendous!
investro,
Don't take the MS personally. There are several Richard Craniums on these boards whose only purpose in life seems to be to seek out innocuous posts and toss MS at them. Brainless turds who don't have enough horsepower to actually post anything, so they hide behind anonymous MS-tossing, I guess to make themselves feel like they're taking part in the discussion. Or not.
I think LNG will be a very interesting space over the next 15-20 years. Quick note, I'm in the industry so take with grain of salt. That said a lot of things relating to trading (if that's your interest) are happening at the moment ranging from the development of true physically settled futures contracts (CME and CBOE) to replace those junky Platts markers that mean nothing, electronic trading platforms are already developing the infrastructure for when that happens, spot trading is growing exponentially, many inefficiencies to capture around the world, direct link to the power gen industry which is very interesting especially as you dive into emerging markets, etc.
Been in the space for close to 3 years now and love the dynamics, currently on a deal structuring/origination desk covering the Americas market, focus on Brazil and Panama.
Energy traders tend to start their careers in roles that support the energy trading function. Reason being is that as a trader, it's fundamental that you understand the activities of the various groups that you will be interacting with during your day-to-day. If we're talking about physical energy markets those roles would traditionally include: scheduling, middle office, commercial operations, and market analysis/research, among others.
if you want a career in commodities you need to be vested long term... there is no this product is great for next 10 years.... also a lot of factors out of your control on what product you may trade... my advice is to get into the industry and work hard... opportunities will find you
Assuming you get 5 job offers for the 5 groups of commodities you've mentioned, I strongly recommend you pick one based on - the actual content of the job (function x product, you must have some preferences), - the management style (who'd be your boss?) and - the corporate culture (supermajors vs. producers/customers vs. banks vs. trading houses). - lastly, if all things equal (impossible), the package
IMHO, early in your career, your priority is to learn, learn and learn.
In terms of products, there probably are significant differences between mature ones like crude and less structured but fast growing as iron ore, etc. You've probably gotten a sense of all this with your previous experiences, challenge your opinion with insider's insights. But at the end of the day, it's about so much more than just the product you're trading.