A few questions on getting started in physical trading
Hi all, I'm currently still an undergrad and trying to break into physical trading (I had in mind working in agriculture or energy). I've been going through the topics posted on WSO about physical trading and from what I gather, it would be best to start as an intern in logistics/operations, try and get to know the traders, and make sure to kick ass in whatever role I'm thrown in. I just have a few questions on going about this direction if you anyone could please provide some input.
I live and go to school around the NJ/NY area and am able to make my way to NYC by train. While looking for places to contact, I've begun to suspect that there may not be a lot of firms that handle commodities in general around my area, but I may be wrong? Could it just be that I haven't been looking in the right places? (I've been searching via LinkedIn and Indeed). What firms should I take a look at around my area or are there really not many?
Is it more important that I study finance or supply chain-related topics in preparation for starting out in logistics/operation roles? I am going to study both in my own time but I want to know which one I should place a greater focus on early on in order to make me better prepared for breaking in. I don't want to come off like a clueless idiot while networking with people who can help place me into a role that would give me experience.
Lastly, in the event that I am unable to find a trading firm to make contact with, what other types of firms should I take a look at? I've been given suggestions to maybe try interning in a supply chain-related role from companies like Hershey, Nestle, etc. However the people I asked who gave me this input are not familiar with physical trading at all. The idea to me sounded okay but I also have no idea. I hope someone could weigh in on this suggestion, I'd really like to know if this was an idea worth entertaining. It's a lot easier for me to make contact with firms like Hershey or Nestle (I think my school has some network with energy firms too) than a straight trading firm, so if this is a suggestion I should put serious consideration into, I would like to know.
Thank you all for the input!
Studying finance/operations management would be definitely beneficial for you (also boosts your chances of even landing an internship in this field). In addition to starting out in operations/logistics, consider trade finance as a starting role as well. Perhaps trade finance in a bank.
I believe most physical traders start out doing trade finance/trading operations/logistics to truly understand the value chain of the trading business and its commodities before actually becoming junior traders. See it as a stepping stone to becoming a trader.
Thanks for the response larrylivingston! If I may ask, do you work in commodities? (Curious) Also, as I continue to search for companies, I've noticed that a lot of firms work in varying but related industries. Do you have any advice on what "keywords/titles" I should keep in mind when searching for companies that handle commodity trading? Or is there no standard jargon and I'm better off looking into their business practice? I ask largely because even if a company handles logistics/operations of commodities, but does not trade, I'm not sure how meaningful interning at those kinds of firms will be.
My advice: get your foot in the door, any way you can. Internships in the commodity world are not like investment banking - you can get a long way with just networking and don't need to go through a formal HR program. Once you have foot through the door, even if this is a 2-week "work experience" or something, it gets a lot easier to land yourself something full time.
Sugar/Grains/Coffee at Nestle/Hershey/Starbucks etc. could be very interesting. They are going to be big clients of any physical firm, so having contacts there will certainly be valuable later in your career if you go into trading.
In your area you have plenty of big firms though. Bunge are based in White plains, NY. Glencore have offices in Stanford CT. In NYC you have a lot of futures brokers: SocGen, Intl FC Stone, ED&F Man, Marex Spectron, RJ O'Brien to name a few. Also check out physical fuel oil trading/brokerage - Blue Ocean Brokers, World Fuel Services.
If you do some solid work on Linkedin with a bunch of employees at all those firms you are going to get somewhere. Try to organise coffee/lunch informational interviews. If you come across interested and driven, people are very inclined to give you a shot.
Thank you very much for the response Caporegime!! Your advice was definitely helpful and I'll definitely try to integrate it into my plans. Hopefully LinkedIn ends up working for me! :( I'm not sure how often professionals check their LinkedIns... I guess I'll need to fork over some money for the premium subscription and find out.
Also thank you so much for the examples of firms. "Futures brokers" was a phrase I was looking for. I've mostly been looking up "commodities firms", "physical commodities firms", etc. while I was searching for companies. Since commodities are strongly tied with futures and options, would it be best to find companies using futures and options as keywords in my search? I'd just like to make sure of this because I still don't have a full grasp of the way physical trading/brokerage firms present themselves and I'd be shooting in the dark if I don't know of a succinct way of finding them.
Again, thank you so much!
Take the 30-day premium free trial at the very least. Use that to look for employees at some of the firms I mentioned. Doesn't have to be senior people by any means. If you are feeling particularly bold try calling the front desk and ask to speak to someone who's name you've found online. Just put yourself out there and get some conversations going.
If you want to work in the futures business these lists are pretty much where you want to focus your search initially. ICE and CME are the largest commodity futures exchanges. Clearing members are some of the most active brokers/traders of futures and options.
http://www.cmegroup.com/clearing/financial-and-regulatory-surveillance/…
https://www.theice.com/clear-us/membership#members
Glencore, castleton, Louis Dreyfus, noble group, mercuria, trafigura, Freepoint, cofco agri, gunvor all have offices in Stamford/Greenwich area. Capo's advice is good, but I'd also try to focus on companies with a somewhat well-defined path to trader as it's pretty easy to just end up stuck in opps or scheduling for the rest of your life (the lack of well run formal HR programs can cut both ways as once you get there you might find yourself wishing there was some well defined analyst associate vp ladder instead of just the "flat" structure sprawling out forever with no obvious next steps forward).
Thanks for the comment, financebro69! I actually didn't think of the lack of hierarchy potentially working against me in that way... thanks for the advice. I'll keep it in mind.
While you have a point, what places aside from banks can you think of that have such a clear path? And I can actually think of people at banks who basically got stuck in senior associate limbo doing comodities.
While I can't speak for the actual path after the graduate program a good sized portion of the firms that Appley mentioned have established rotation programs similar to what a bank offers. The ones I know of are Trafi, Vitol, Noble Group, CCI, Mercuria, and Glencore. Then of course the integrated oil companies like Shell, BP, Statoil, and P66 (the exception as they are not integrated) have their programs as well.
The big difference I have found is that the programs are not nearly publicized as much as banks are. Noble Group I heard about because I have a friend that works there, Vitol recruited strictly at my school, Mercuria just posted the opening on school job boards, etc.
Hey all, I don't want to hijack the thread but I was wondering if anyone had more specific advice on breaking into coffee trading? It seems like a very closed world even compared to other commodities. Do you guys have an advice on networking or finding internships?
You're doing very well by interning at FC Stone. From there the path is simple. Get close to their Softs trading desk, make a list of all their clients active in coffee. Even better, try to have some contact with them in a professional context. If you are still keen on coffee after your summer and haven't been tempted by the futures world, apply/network aggressively to all these firms. Keep an ear out for ED&F Man, Louis Dreyfus, Koch, ADM, Cargill, COCFO Agri to name a few.
Another way forward would be to do some work in a producer country after you graduate - Costa Rica, Brazil, Vietnam, Colombia etc. Could be anything - charity or NGO - but physical traders love to see that you're open to working "at origin" and gives you some interesting conversation topics for networking.
Awesome, thanks for the great advice. I'll definitely try to network this summer and see if I'm still interested in the Fall. Thank you all again, this whole thread has been invaluable.
Physical Commodities Trading Business (Originally Posted: 03/23/2014)
Hello Everyone,
I would be grateful if someone can give a general overview of how the physical commodities trading business actually works?
Additionally, I would really appreciate it if someone can explain in explicit steps on how to start a physical commodities trading business?
Furthermore, if anyone has actually ventured on their own and started their own physical commodities trading firm please share some of your experiences, advices...
Thank You
that's the spirit boy!
bump* Would like to know as well, very interested...
Leveraging dissertation work in order to break into physical trading? (Originally Posted: 03/17/2016)
Background: 26yo, finance undergrad, ~ 1yr O&G consultancy internship, 5-6yrs personal investing/trading experience, currently wrapping up an M.Sc. in Maritime Management.
I have for the past fours years sought to align my academic approach and extra-curricular activities towards a career in physical commodities trading (preferably petroleum products/middle distillates).
My plan is/was been to come up through shipping, through learning the ropes in operations, chartering or freight brokering. The thought is that lateral movement from brokerage/operator to charterer (trader) should be fairly clear-cut given that these have substantial direct interaction (i.e. building contact networks and learning market dynamics).
Ever since starting grad school I have had an idea that writing a thesis in collaboration with a desirable company would be an ideal way to showcase your skills and get a foot inside the door for future employment.
I have since last end of last year approached a few dozen shipbrokers and trading firms with the proposition of collaborating on a thesis, in which the topic is of the firm's benefit and mutual relevance. This is basically offering some months of my time for free to investigate some topical trend/challenge/issue in the organization or its market(s). This has proven more difficult than what I envisioned with the majority of requests rebuffed. Accordingly, I am currently looking at pushing back the dissertation work a semester, being that I have not been able to find a relevant research topic/partner.
Obviously, the big league boys such as Trafi and Vitol have proved extremely hard to penetrate. Would you happen to know of middle-market/niche firms in petro products that don't have massive HR depts and would be grateful for pro-bono analytical resources? Do you have any tips for on how to proceed? Should I continue the effort of reaching out to the regional (not-so-sexy) offices that likely go unnoticed by other suitors (Montevideo, Kiev, Lima)?
I am based in Northern Europe, but willing to relocate to just about anywhere (expect for a few South Asian countries). At that, I am a aficionado when it comes to Latin-America and speak Spanish (however, realize the region is more geared towards metals/minerals).
Thanks in advance for any leads.
Any input on this at all?
I know there are a few WSO resources involved in physical trading, especially on the soft/agricultural side.
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