Commodity Trading Comp

330west's picture
Rank: Senior Monkey | 81

Seeing if there are any other physical traders who can give me some insight on comp at other trading shops. If you don't want to post on here then maybe send a PM.

A little background for me was an analyst for about 6 months, then moved into a physical trading role (got lucky quick). I started out originating about 1.5 MMT of grain in North America direct from elevators, and also handled freight trading and river logistics to vessel loading ports. Now I also manage merchandisers buying direct from farmers along with this. I handle pricing for all sales to destination markets and making domestic sales. Also I manage the risk for our desk, manage the futures/hedging and the hedging for all other grain desks. I have been in my role for about 5 years now(Also not located in the south/midwest so COL is not cheap). My base is around 80, also do prop trading and made about 500k and get 10% from the prob book. Physical PNL was around 15M but get no bonus off physical.

Comments (16)

Feb 20, 2020

Sounds like you need to swing harder in prop, if thats the only way for you to get paid

Feb 20, 2020

So when you trade physical, are you putting on views of basis, or is it more you have the merchandisers let you know when there is riskless profit to be had and you just put together insurance and logistics? If you are putting on views with physical that are "risky" kudos to you and I would try to convince your boss it is similar to prop profits. I might be giving terrible advice, but maybe look at delegating to merchants and grow the prop book? What the hell do I know though

Feb 20, 2020

I am putting on the views of basis myself. I bring the pricing out to my team and let them purchase from farmers which might only account for 5% of what I am buying/selling from elevators or other trading houses which is based upon my thoughts on market direction whether it is flat price or basis. Also a lot of it is purchasing flat price then creating basis, with options/futures, pricing then giving price + margin to sales and them selling to the export market.

Funniest
  • Analyst 2 in S&T - Comm
Feb 20, 2020

Bro not trying to be a dick here but how does your ass feel because I think you're getting fucked unless there's some extraneous circumstances.

    • 3
    • 1
  • Junior Trader in S&T - Comm
Feb 20, 2020

dude you are basically the entire grain department and you are only getting paid 120k?? Your management must love you......what a steal!

Learn More

Boost your resume and land a finance job by passing the FINRA SIE. 264 pages & 1981 smart flashcards written by a former 8X top Fidelity instructor. Try it for 0 bananas here.

Most Helpful
  • Analyst 1 in S&T - Other
Feb 20, 2020

I used to work at an ABCD as an ags trader for a few years, his comp numbers are more than in line and anyone disagreeing clearly doesn't work in the industry, 130k all in is standard for a jr trader with 3-4 years experience. Also, 10% of pnl from prop is a pretty amazing payout, usually it's 5% of pnl - costs - salary for the more sr guys

Have heard of jr guys running a book that usually makes 10mm, having an amazing year making 25m, and receiving <100k bonus despite firm having a great year. They know they got screwed, but paid just enough to bare with it. The truth is there aren't that many seats in the industry and it's not easy to move, so firms are able to screw jr guys all the time and give them just enough to stick around

I hear lots of delusional people on this forum throwing out unrealistic comp numbers they've heard from other people during the boom times when China was buying everything in sight, and when i entered the industry i also had completely unrealistic expectations.

    • 3
  • Junior Trader in S&T - Comm
Feb 20, 2020

that comp sounds like more Adm or bunge than carg or dreyfus lol

  • Analyst 1 in S&T - Other
Feb 20, 2020

Nope

Feb 20, 2020

I get that 10% of prop is nice, but he should be making a bonus of some type for his physical. Obviously not 10% and it should probably be <100, but it seems shitty they cannot reward both kinds of solid work.

Feb 23, 2020

This is true of pretty much any commodity and firm except maybe power/natty where there are a lot more seats. Money overwhelmingly flows to the senior people with the jr guys getting just enough to bare with it and hope to move up someday. Also, don't overestimate how much most physical books make. Even the biggest books are grinding it out most years. The eventual banger year occurs during major market dislocations (oil contangos, changes in tariffs, droughts...).

A lot of firms are willing to lose money on the physical to make money in paper. Not a sustainable long-term practice but too often the case.

    • 1
Feb 25, 2020

This is what I kind of figured, and the amount of seats in the ag industry is incredibly limited so I am bearing with the okay pay and getting as much experience as I can out of it. I think another issue for me is where I live there are basically no commodity trading firms in the region.

Mar 12, 2020

PM me

  • Analyst 2 in S&T - Comm
Feb 21, 2020

Depending on how asset dependent you are, it seems like 200-300k all in would be more fair.

Feb 25, 2020

I'm interested in what factors you take into consideration when trading from prop side. Sorry to go off topic. How do you truly evaluate risk and profit probability.

Feb 25, 2020

I do some value trading in commodities, it makes it easy when I can see where physical/basis prices are going from what domestic consumers and customers in export markets are paying. Most of the time I am selling puts/calls and sometimes buying/selling outright futures. I will mix in some technical strategies as well but that is just to verify my thoughts on price direction. I think my best trade last year was selling deep ITM puts because I knew the product was grossly undervalued and made around 275K~.

My risk here might seems incredibly high but I saw on farm prices were sky rocketing due to a couple large domestic's who are never short being incredibly short so I saw it as a no brainer and supply was dropping drastically due to yield issues on the farm

Feb 25, 2020
Comment