Decisions in the ag space
Thoughts on making jump to a pure trading shop (Andersons, Gavilon, Scoular etc.) in the first couple years of career or staying as a merchant at a company with large asset base that does engage in risk taking. I guess a better question is am I missing out not taking my shot and making the jump to a pure trader while I’m still young and if it fails is it feasible to go back to the players with assets?
Hi Junior Trader in S&T - Comm, no, I never sleep and so I can respond to any lonely threads (like this one) at all hours of the night. Impressive, I know ;-)
More suggestions...
I hope those threads give you a bit more insight.
I'm at an ABCD as well and think heading over to Lansing, Viterra/Gavilon or Scoular sounds like a great move if you're committed to staying in the physical markets. That said, it doesn't seem like many have made the transition the other way around (per LinkedIn), so it may be a bit tough to head back to one of the aforementioned Merchants of Grain after leaving. On the other hand, maybe the respective cultures of those leaner shops make it worthwhile to stay rather than head back and deal with the politics and bureaucracy of a larger player with assets.
I think one of the key benefits of working at one of these larger firms is the sheer flexibility you have in terms of what you want to learn - you can easily get great exposure to a variety of commodities (in both the cash and paper markets) and modes of transportation within just a few years, which could certainly make you more valuable at a smaller shop offering more autonomy and a more generous comp structure at some point down the line.
Yeah that's what I'm afraid of regarding moving back. I really enjoy merchandising physical product albeit around an asset base but just don't have the experience/confidence to go run out and earn money direct off the book. It's easy to have fun because you feel oh so clever bringing in positive p&l when there's a bigger margin for error that covers up your mistakes, but if you go to a place with no edge being mediocre let alone bad seems like it could become a slog in a freaking hurry.
I ended up leaving my current shop to take an offer with a large food company that seems committed to taking risk in the ag trading space (and could give a better base salary haha) over offers from some of the pure traders, so here's to hoping I escape the politics at a new shop and keep progressing on the learning curve and maybe make the jump sometime down the line
Congrats man and best of luck in your new role! Would love to know how it goes
Much like what Billy Walsh said, its a very different market and role than what you would get rising through the ranks in an ABCD, you can make fantastic money living in a 3rd tier city, Overland Park/Omaha/Toledo getting a slice of you PnL but these high earners are usually just running a cross country book and live and die by producer connections, physical plays, and truck logistics. While if you work at an ABCD you have a good chance of spending your time living in "better" city like Chi/Minn/NYC and while for most of the firms your salary and bonus is structured by your job bands, you still have much more opportunities to gain exposure to all parts of these bigger firms with a more integrated supply chain. I would argue that skills along the way of working at an ABCD are much more transferrable than what you would as a "pure trader" at a Gavilon/Scoular/Lansing. The ABCD I just left just picked up some new merchants from these kind of places and pretty much all of them had to take a backwards move. Doesn't make much sense for some of these guys to take a backwards move and probably a big step down in comp unless they really couldn't cut it or they want some long term job stability.
Excellent insights as always. I was curious - what's your take on Viterra's acquisition of Gavilon? Do you see them taking on industrial assets like mills, crush plants, etc. and competing with ABC on that front down the line?
I thought it was an interesting acquisition, I understand why they did it, Viterra was missing 1 piece of their footprint, the US ag sector and with Gavilon written down half its value over the past 10 years, Marubeni I feel like it wouldn't be too opposed to part with it, especially since they get to keep their PNW terminal with Columbia Grain. Im not super bullish on Gavilon just as a business, I feel like they're their asset footprint is too much reliant on truck houses when we have seen the ABCD's pivot from trying to maximize elevation margins and pivot to downstream, value added products. This is what Bunge did a bit ago when they sold their elevators to Zen-noh. ADM, I believe, is the only ABCD that still has a portfolio of elevators that don't touch a river or rail line. I dont know too much about their strategy, but IMO the only way Viterra could make this work well long term is if they break away from the cross country model and really focused on specialty (non-gmo and organic) origination, HVO feedstock sourcing, or go public now and use some of that money they raise to start building more value added assets like crush plants.
I don't have that much insight within the US market, and my opinion is worth what it is worth as I am in a very junior position, so please correct me if I ramp on total BS.
I don't think that the future belongs to pure traders, and as it is evident for metals and energy, the current consolidation process will substantially change the industry's scenery. It is both due to the nature of the game and the increasing pressure from the political sphere on ESGs. Soon, only major integrated traders might succeed in this context.
However, I have difficulties imagining how the skills, resources and expertise of the smaller players' traders will prevent getting back at an ABCD or whatever. The skills are transferable, and networking is vital in this business. I strongly feel that only this will matter if a move to another company is required. I think that working for a pure trader is genuinely more fun than working at an integrated, and as such, I would encourage you to make this move.
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