ABCD Commodity Trading Salary Expectations
Hi all,
I have accepted a commodity trading internship at an ABCD over the summer. If I get a FT offer, I was wondering what the salary is for year 1, 2, and 3? My friend received an 69k + 9k bonus from another Commodity Firm. Additionally, I received offers from a consulting company (74k + bonus) and IB (80k +20k bonus), but I like this company's training program. Essentially, I am just wondering if I should take the consulting or IB role/$, or does commodity trader pay well too?
Whatever insights you can provide would be helpful
Why do trading if you want to own your own business? Commodities pay well, but not really in the early part of your career.
For the first couple years of commodity trading, many employers have their new commodity traders learn more about the operational process than actually doing trading. With This commodity company has a deep a-z operational system, and they have one of the nations best and quickest program (1 year). So the money may not be as good as consulting or IB, but offers more of what I am looking for.
How long does it take to be a trader?
Weird because the Traders/brokers who trade/sell Carbon Credits have great base salaries.
Lets call it 55-60 maybe 65 on upper end all in. I actually agree that merchandising is a great way to pick up a bunch of different skills. Let's say the work between cargill and the consulting firms net out in terms of helpfulness for long term goals. My guess is cost of living differences also net themselves out so it really comes down to how much you like city living vs rural life.
Agreed. Commodities are a very entrepreneurial field, the breadth of skills you develop are a bit off the beaten b-school track, and that's probably a positive.
Commodity trading will pay less to start because the learning curve is very steep. But if you stick it out, the compensation will be at least equal to your average IB or greater if you kill it. That said, if your goals are to learn more about how to run an overall business then trading is probably your best bet depending on what type of consulting gig you get. You will have to learn all aspects of running a trading business as you move up in the organization. Everything from logistics, to contract negotiation, accounting, transaction settlement, risk management, credit, and more all are factors on physical trades and learning these skillsets make you a better trader but I can also see them lining up well with your desire to own your own business one day. I personally know of at least one trader that did a few year stint at a large energy company before going back and taking over his family's manufacturing business and he has cited the holistic exposure he gained in trading as being instrumental to his ability to integrate back into his family business.
How long does it take to be a trader?
do not pick your first job based on the starting comp. thats foolish.
Hi Fuwuyuan,
Thank you for your comment. I totally agree that picking a first job on comp is foolish. However, I was more so wondering what year 3 looks at an ABCD trading firm? Not just looking at year 1 or else I would have accepted the other offers.
deleted as my input is not related to ABCD
85-95k base depending on which ABCD
I spent a 5 years at an ABCD before moving to a multistrat hf. Doubled my comp after making the move
Realistically, the first 10 years at a commodity trading house, You will earn less than your peers in IB/S&t or consulting. I’d say expected comp 10 years in is 250k all in.
you should do the internship and see if you like the work, it’s very very different from typical finance/trading roles, and suits some people better than others. You definitely learn the intricacies of the physical market that you’re trading, but the skill set is very niche and you are definitely pidgeon-holed a bit. changing careers will require starting back at square 1.
in hindsight, i wish i would have done IB or consulting. I think the path is much clearer, you’ll make more money in the short run, and be able to transition easily to another career if you want to switch to a corporate, but take my advice with a grain of salted
In the long run how have you done?
Are you still trading commodities at the fund or did you transition to investing in a different asset class?
How did you position yourself for an HF role? I'm in my first year at an ABCD and am hoping to transition from a commercial role to a merchandising/trading role later this year.
most importantly, you need to be following other markets. It’s very easy to get lost in the day to day when you’re trading corn premiums and that’s your whole world, but you need to have a view on commodities as an asset class, inflation expectations, emerging market fx, rates and volatility And everything else going on in the market
i was able to differentiate myself by having a strong understanding of options pricing (knowing how Vol surfaces in ags trade and effective strategies to profit from the skew) and systematically backttesting
You’re also going to need at least decent computer science skills, so learn python or R
no one at an ABCD is going to be teaching you these things, so it really has to be self-taught. Definitely not an easy switch to make, but it can be done if you put the work in and network
Looks like your questions were pretty well covered. Here is my ranking on phys shop pay 3-5 yrs out. Happy to have you guys weigh in and tell me I am a moron.
1A) Ethanol Brokers
1B) Non-screen traded swaps brokers (black sea wheat/palm/SAS etc)
---------------
1) Lansing/Andersons
2) Dreyfus
3) Gav/GPRE/Scoular
4) Cargill
5) Food Stamps
6) Bunge
7) Even More Food Stamps
8) ADM
Right out of school Dreyfus pays the best of the ABCDs. Scoular/Andersons will pay you a pittance starting out (sub 60), but much higher upside once you become established and get defined P&L, much more than an ABCD would at an equivalent mid-career point
Cargill would be most interesting if you have interest in moving to the more "corporate side" of the trading world. Due to their massive global scope, there are many cool management roles they toss you in if you have a) ability and b) interest. I know a guy personally who at 30 got sent to run crushing assets in Asia.
At Dreyfus, their old global wheat guy bounced to a HF and he was barely 30-31. Dreyfus mafia is prevalent across the prop space
Would say LD has the best rep if you want to eventually move to a HF seat. Names like Neal Driscoll are known in the grain world for a reason....
What does this part mean?
I’m guessing those Brokers are paid better
Neal Driscoll, now that's a name I haven't heard in a long time. Guy was practically legendary when I was still in Ag.
Would say that your comment largely tracks based on my experience at a few different Ag companies. Will say that I think that Dreyfus still has the reputation but I'm not sure it's still deserved. Plenty of smart people there but given the family feuds in recent years they've had their share of out of market struggles that have pushed down comp and seen top traders fleeing for greener pastures.
Agree that the mid-size guys are definitely more "eat what you kill" in terms of comp tracking your personal P&L as the ABCDs are going to have a black box bonus structure similar to a bank. But the work at the ABCDs will probably be more interesting. You'll have stronger fundamental S&D research, a more global perspective, and the trading will be more interesting. But I know traders at those mid tier shops you mention that make way more than the average ABCD guy doing nothing but slinging truck grain in western KS so it all depends on what you're really looking for.
100% right on. ND's retirement trade was BSW vs KW that blew out. The first to try that spread and win. Legendary
Mid-tier shops, would totally agree. Less "interesting" and less "global", but make it rain with cross country truck and rail trading. Fair # of Scoular and ex-Lansing guys retired before 50. But this is a totally different ball game than trading CIF Nola or PNW beans for an ABCD. Huge focus on customer development and farmer level originations at this level. Different strokes for diff folks
Feels like there are more and more global "mid size" shops that compete with the ABCDs. Names like Holbud, ETG, Seaboard Trading (not that midsize but still), Gemcorp and so on. Lots of guys that had success running black sea originations to MENA are thriving
I think you are overestimating how much ADM pays
How about even more food stamps + a free obama phone and a half priced bus ticket?
I wouldn’t compare gavilon and gpre to Scoular. 10 years ago gavilon and Scoular were pretty much the same but after the Japanese bought out Gavilon it become ADM lite imo.
I’ve noticed how companies like Cargill and Louis Dreyfus have “trader trainee” programs that are a couple year rotation and recruit seasonally. But they also have “merchandiser trainee” programs that appear randomly. I imagine the “trader trainee” programs are more structured with a better opportunity of becoming a trader. Can anybody give some insight on this?
More than "trader trainee", these are now called "commercial trainee" programs. If you can, go for one of these, the rotations are very useful like you said and you end up with a good name on your CV which, in agri, will help to transition to a junior trader or similar type of role.
"Merchandiser trainee" programs are more focused on local markets, be it working with elevators in rural US, coffee sourcing in Kenya or else... you name it! It's still a good opportunity but in my opinion you have a bit less exposure to the organization if we are talking ABCDs (still, great opportunity to learn and move up the ladder).
If the goal is trader, which program will be better?
from my experience at one of the mentioned ABCDs, most of the traders moved up from the merchandising path. The trader path was more structured products and risk management. The merchandising program also recruited every year. So, I would disagree with Brookclyn though, it might have only been for the firm I interned at.
But will the merchandising program cost much more time?
I would say the exact opposite at the ABCD i was at. Nearly every trader in a good seat came from the trader trainee program
i don’t think anyone moved up from the merchandising side into a real trading seat. There’s just too many jr traders fighting for the good seats in the main offices
What is your pay as a commodity trading intern?
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