Transferring Commodities

Sangisinacoma's picture
Rank: Baboon | 112

I am a physical Trader at a small commodity house (~200M/yr) and I would like to know what your thoughts are on the possibility of going from a small firm like this where I am a lumber trader to an oil or precious metals houses such as Trafigura or citadel.

Are the skills transferable across commodities?

Comments (23)

Aug 5, 2019

It's common to move to a large firm within the same commodity. However, cross commodity is rare.

    • 1
Aug 5, 2019

What if I am still at an early stage in my career? I have been working at the firm for 1 month

Aug 5, 2019

What if I am still at an early stage in my career? I have been working at the firm for 1 month. Also would a CFA help me possibly transfer to paper trading in a bank?

Aug 5, 2019

I'd say give it some more time; it's only been a month. However, larger firms would like 2+ years normally. I don't think a CFA does much in commodities.

Aug 5, 2019

But given the rarity of changing commodities do you think that I should get the ball rolling now? Also what makes you say that a move is rare?

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Aug 6, 2019

Do you think that given my experience trading coupled with a CFA would make me an eligible candidate for an equities desk?

Aug 5, 2019

1 month is not going to cut the bill. What will you say in your job interview with Trafi/Citadel when they ask your trading style and your achievements as a physical trader?

If I was the hiring manager I wouldn't be impressed. First of all, you just started a job and think the grass is greener. Secondly, how can I trust you won't be looking for another job when you start.

    • 2
Aug 6, 2019

100% agreed!

Aug 6, 2019

Right, but would it make more sense to cut bait now and transfer to another shop that trades something that Trafi/ citadel trade so in a couple of years I will have experience that is directly applicable.

Aug 7, 2019

If you are planning to cut bait now and use your lumber trading experience as part of your leverage then this won't work. A trading floor won't be able to trust you jumping ship after 1 month.

But if you plan on applying without mentioning your lumber trading experience then you are playing pinata in a dark room. Your application will be no different than any other Tom, Dick, or Sally.

    • 1
Aug 6, 2019

After 2yrs of experience, you can apply to Trafigura's "International Trader" programme. This is their selection process for both internal and external candidates to get a risk-taking seat on one of Traf's trading floors. They're product agnostic - have known candidates with an ags background (a sector Traf isn't involved in) to get a seat on either energy or metals. If you want to change commodity and level-up in terms of company profile / prestige, I think this would be your best option down the line. Just depends whether you can stomach two more years after having only done 1mo so far...

    • 1
Most Helpful
Aug 6, 2019

This is pretty much spot on. It's incredibly difficult. I've seen people try to make the move internally (Ags to Energy) and get nowhere. The crux of the issue lies here, using my own skill set as an example: I have traded Ags for over four years, and I believe I have the base trading/commercial skills set to trade energies - the thing is I don't really have a clue about the intricacies of executing physical oil trades. That's why you won't get hired without starting from the bottom again.

Trafi are the only one that actively hire from a wide range of commodities - that's your best shot. If you are one month in and at a small house, you are better off applying to the Trafi graduate programme in a year or two than the international trader programme, before working your way up - by starting there you will give yourself more of a chance of getting through the international trader programme.

The international trader programme is well known within the industry, it states 2-5 years experience is required - however the reality is that most people have 4 years at least in a commercial role, most likely with PNL responsibility. You will be going up against experienced physical traders from BP/Shell as well as financial traders from places like Goldman.

P.S Not sure how much physical Citadel do these days - however, they will expect a much more technical skill set than working at a physical trade house (i.e having a coding background is a huge bonus.

Aug 6, 2019

Do you know how competitive these programs tend to be? Also, do you know if Trafigura or any of the major shops deal in lumber? From what I have found so far there are not many companies that trade lumber... trying to get some info for if I am unsuccessful in changing commodities or getting into the program

Aug 7, 2019

Highly competitive. Trafigura tends to receive ~5,000 applications (which, for an experienced position, is insane) for 10-15 positions (of which ~50% will be filled by internal candidates). Trafigura certainly doesn't deal in lumber, however Glencore Ags might (you'll have to check). There are also the four large ags trading firms who are much more likely to: Archer Daniels Midland, Bunge, Louis Dreyfus, Cargill.

Aug 7, 2019
Sangisinacoma:

From what I have found so far there are not many companies that trade lumber...

A quick google search brings up quite a lot of companies:

Baillie Lumber Co, Richmond International Forest Products, Emerald Forest Products, American International Forest Products, Biewer Lumber, Robinson Lumber Company, Plateau Forest Products, Georgia-Pacific Building Products, US Commodities/AgMotion, Canadian Engineered Wood Products.

Sangisinacoma:

Also, do you know if Trafigura or any of the major shops deal in lumber?

What do you consider as a major shop? Trafigura is mainly dealing in energy and metals. A significant private trader specializing in oil and non-ferrous which tie back from the days when Claude was in M&Co.

If you have high hopes to trade energy and metal then by all means set yourself a target for these 'majors'. But there are also plenty of other opportunities in your own backyard. Logging is a huge industry (obvs upstream of lumber) with large MNC controlling the forestry industry. There are constant round voyages of loggers going to and from China, Japan, etc for lumber/paper mills. My contacts in shipping industry always tell me how well these traders are doing, and the shops with <10 people are making bank.

    • 2
Aug 6, 2019

This is pretty much spot on. It's incredibly difficult. I've seen people try to make the move internally (Ags to Energy) and get nowhere. The crux of the issue lies here: I have traded Ags for over four years, and I believe I have the base trading/commercial skills set to trade energies - the thing is I don't really have a clue about the intricacies of executing physical oil trades. That's why you won't get hired without starting from the bottom again.

Trafi are the only one that actively hire from a wide range of commodities - that's your best shot. If you are one month in and at a small house you are better off applying to the Trafi graduate programme in a year or two. On completing that, apply to the international trader programme, And work your way up - by starting there you will give yourself more of a chance of getting through the international trader programme.

The international trader programme is well known within the industry, it states 2-5 years experience is required - however the reality is that most people have 4 years at least in a commercial role, most likely with PNL responsibility. You will be going up against experienced physical traders from BP/Shell as well as financial traders from places like Goldman.

P.S Not sure how much physical Citadel do these days - however, they will expect a much more technical skill set than working at a physical trade house (i.e having a coding background is a huge bonus.

Aug 6, 2019

For what it's worth, I am in metals and if a resume made it to us where the guy had done well trading lumber, I'd say there is a good chance that person would at least get an interview. He would start at the ground floor of course but there would be an expectation he would pick things up quickly.

As mentioned above, the crux of the issue is product specialization. If you want to do well in physical, you have to know your market, and that takes a whole lot of time. A year or two where you are could open some doors later, but make sure you really want to commit to that path if you do decide to jump ship. You have got to have a better idea of what you are getting yourself into than "oil or precious metals houses such as Trafigura or citadel."

    • 2
Aug 7, 2019

I think you're very focused on how to get a job, when you should be focused on how to become the guy that people want to hire.

    • 1
Aug 8, 2019

Start your own commodities trading house/shop like Vitol Guys did in 70s-80s and say f**** off to HR, interviews, and other BS. You have now 0% int. rates just raise capital and start working :).

    • 2
Aug 8, 2019
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