Would you get into commodieties trading?
With all this drama about the commodity crisis and the future projections of shortages, I'm getting more interested in learning more than just the basics of commodity trading rather than M&A or ER. Feels like the minimal amount we learn in business school and internships doesn't give a good picture of the opportunities in this field. For some weird reason, it seems much more exciting to trade oil, metals and all that rather than just pieces of paper to be fair
So anyone has a good take on the future of this industry?
Commodity trading be great given you are at the right place. Heard that specifically in Geneva at bunge and cargill things are quite great, high pay & smart ppl.
Good rule of thumb, this stuff comes in cycles. When things seem like they have a bright future and everyone is hiring then you should be scared as a new grad. Similarly just a few years ago nobody was hiring and it was all doom and gloom. That all said if you are interested in it why the heck wouldn’t you pursue it
It’s impossible to predict on a long term horizon. In 2019, everyone thought that volatility was dead because of US production response. In 2020, everyone thought that peak oil demand was in the past, and oil majors as well as institutional investors embraced ESG. In 2021, people thought that a new super cycle was in store for energy because US and OPEC were slow to respond. In 2022, Russia invaded Ukraine (also something no one saw coming) and ESG has dropped off the radar. Who knows what’s next? I would certainly not put much stock in decade long assessments.
I been in space since 2006 and people told me I was dumb then.... then I was smart then dumb again then smart again..
pick a career cause it interest you not cause you think it will be cool for a few years...
I agree with what others have said. You have to pick something because it genuinely interests you. Having said that, I always enjoyed commodities because of how tangible it is and the fact that commodities are what drives the world. Commodities are what feed us, provide energy that has allowed modern society to become what it is, and provide materials to allow us to build all of the infrastructure we have. If prostitutes are the world's oldest profession then grain traders are second. An interesting book just came out and you might enjoy it if you want to read more about the impact that commodities have on geopolitics, world history, empires, etc.
"Oceans of Grain" by by Scott Reynolds Nelson
Second'd everything said.
Agreed with your agreement of agreeing with others
Exactly. I'd put copper in there with grains in terms of oldest professions.
Point is, there will be times where markets are super hot like right now and times where they will suck like a few years ago, but it's an absolutely fascinating occupation and is likely to always exist in some form or another.
Lots of commodities guys like to talk commodities up when really we all know IB is better (as long as you are an actual finance type guy and not some work life balance freak) stay in IB dont go into commodities - this is coming from a guy who has spent time at a physical shop + a hedge fund + bulge bracket - message me if interested
Lots of good thoughts here but there's one big thing that still needs mentioning. If you are looking at a front office role in commodities and focusing on the actual commodity instead of companies involved in the space, its more macroeconomics than finance. Whether Exxon makes money drilling for oil is relatively immaterial, what matters is how much are they producing and what do they expect to produce over the next year, 5 years, etc. Same could be said for miners, electricity producers, and so on.
If you like economics classes more than finance, it could be for you.
Good point. It really is just applied economics. Where is the marginal supplier/demand base and what price are they willing to sell/buy?
I would say its not even Macro, sure macro helps and general interest in it. Its just econ 101, supply = demand.
I took them saying macro to mean supply and demand fundamentals but that could just be me being generous with the definition. Although macro can impact trade flows considering forex.
Right correct, I see after reading the full message stream now.
Yah I would say micro is supply/demand of an industry. Macro to your point, is trade flows, interest rates, is-lm, gdp so on.
Btw if anyone wondering Trafigura website offers some understanding of the basic logistics and economics too.
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