Commodities - Dairy markets
I was wondering if people from WSO have any insights on the dairy market. At first, it sounds to me as a kind of back to back business but in looking a bit closer it seems more complicated than that as there is a dairy paper market.
If any people have an answer to the following questions :
- Who are the big player on the physical and the paper side since the exit of LDC ?
- Why does dairy trading seem to stand back compared to traditional soft commodities (sugar, coffee, wheat) ?
- More broadly, what is your feeling about dairy trading ?
Many thanks
I believe Hoogwegt and Interfood are the big guys. But I'm not sure what chunk of the business they have vs the Nestles and Danones of the world.
See above, could be much of the market is run by the big consumer good firms, or artisans on the other end. The traders aren't linchpins the way they are in the other commodities you cite.
Had an in at LDC for that a while ago. Seemed interesting enough and volatile. But the small number of trading minded players was a concern for me.
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No clue.
Knew some dairy traders
culturally and compensation wise it’s closer to working a job in the dairy industry than it is to being a trader at a hf. Futures are illiquid. Seemed really boring unless you’re passionate about dairy, not something I’d ever choose
Its procurement and purchasing style gig. Too much market power in select firms as mentioned and government rules.
Ok, so if I sum-up : poor market design which result from the small number of "traders" in this space combined with the prominence of big consumers firms not forgetting the absence of a proper "trader culture". From this perspective, it seems not very appealing except perhaps as an entry level position to gain experience and try to leverage on it so as to make a move after 2-3 years on another commodity. What I do not manage to explain is the strong connexion that dairy trading seems to foster with Netherland as the main firms quoted are located there. After a few searches, Olam seems also to have a few dairy traders in Amsterdam as well as Cargill in Belgium in complement to its cocoa unit in the country.
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