A Conversation with Wouter Jacobs

Good morning, Wouter, and welcome back to Commodity Conversations. Please tell me a little about yourself.

I am the Executive and Academic Director of the Erasmus Commodity & Trade Centre in Rotterdam.

We run two commodity programmes: a commodity elective on our MSc course at the Rotterdam School of Management and a part-time executive programme in commodity trading.

Are you an ex-trader?

No, I’ve never traded commodities. I’m a pure academic. I’ve spent my professional life in academia. I have a master’s in science in spatial planning and economic geography. I did my PhD in management with a thesis on the political economy of port competition between Rotterdam, Dubai, and Los Angeles.

If you grow up in Rotterdam, you live with the port, the cargo, and the ships. It is the DNA of the city. And we’re proud of it. Rotterdam is a place where people talk straight. It forms you. Also, growing up in a big port makes you at a young age aware there is ‘another world out there’.

What is spatial planning?

Spatial planning is about regulating the use of land. And land is scarce in the Netherlands. Strategic planning, where I did my specialization, focuses on using scarce resources broader than land and aligning stakeholders around common objectives. During my PhD, my focus shifted towards more institutional factors shaping differences in regional economic outcomes, such as the level of state involvement or the role of mandates and decision-making structures of port authorities. I travelled to Dubai and Los Angeles for my PhD. It gave me a global focus on the economic geography of trade.

What is economic geography?

In economic geography, you ask why particular activities occur in specific locations. For example, it is logical to situate an oil refinery in a port to reduce transport costs. But why are so many traders located in Geneva? That’s a more complex question to answer.

After my PhD, one of my first commercial projects was studying the relationship between business services and the port economy. I talked with bankers, insurance companies and lawyers, learning about the white-collar jobs around maritime trade, shipping, and port operations. They introduced me to commodity trading as the business that makes things move.

A whole world began to open to me, and I could see everything come together. I began to ask why I didn’t know about this world before – why had no one taught me any of this? Why are the universities not teaching this?

I saw a great opportunity to swing my academic career in a new direction. I love to teach and research. I wanted to transmit my intellectual fascination and newfound awareness of the commodity world to my students. I realized we needed educational programmes on commodities, so I decided to build them.

I designed and set up our executive program, which is, let’s say, an MBA light. I recently told my wife, “It’s, in a way, a gift to myself, which I can enjoy every year and learn from.”

You spent two years in China. What did you learn from your two years in China, and how did that come about?

It wasn’t full-time. I was there as part of a partnership agreement that the University of Antwerp in Belgium set up with a university in Chongqing, China. I taught a course on global production networks. It was a fantastic experience, learning from subtle cultural differences and about different perspectives on world affairs.

Are there any commodity courses in China equivalent to what you have here?

I’m pretty sure there are. However, I’m not aware of, let’s say, a Geneva or Rotterdam type of approach to teaching commodity functions such as shipping, finance, or execution.

Could you tell me a little about Erasmus University Rotterdam and the School of Management? You mentioned earlier that you are relatively well-placed in the rankings.

Merchants founded Erasmus University in 1913 as the Netherlands School of Commerce. The university has traditionally offered courses on business and maritime trade. The Rotterdam School of Management was founded in the 1970s, inspired by American business schools. It was when prominent Dutch multinationals like Shell, Phillips, and Unilever started to advocate this type of education.

In economics and business, we rank among the top ten in the world. The Financial Times consistently lists RSM in the top ten in Europe. The Financial Times ranked our MSc in International Management as third in the world in 2022.

Why is the Erasmus scheme, where EU students can spend one year in different universities, called Erasmus? Is it because you guys started it, or is it just a coincidence?

Good question. The inter-European subsidy scheme is for students who follow parts of their curricula in other universities and countries. It is named after Erasmus, as is our university. Erasmus was a humanist scholar from Rotterdam, known for his critical essay ‘In praise of folly’ from 1509/11. He was among the first travelling scholars visiting other European universities to learn and share ideas. ‘Open-mindedness’ and ‘world citizenship’ are still core values of our university.

Let’s start with your executive programme. What is it?

The executive program is a leadership program for young professionals with eight to twelve years of experience in the commodity space. Our focus is not on operational trading skills but on learning to navigate in times of uncertainty. All businesses are exposed to uncertainty, but the commodities business is especially so.

We have four core modules where participants learn to understand the driving forces behind the commodity markets: geopolitics, sustainability, risk and compliance, and technology and innovation.

As part of the leadership program, we confront our participants with real-life situations. We teach them what people expect from their leaders regarding ethics, values, culture, and courage.

Participants learn from each other. It’s an integral part of the learning approach. We have a rich ecosystem in the classroom which allows participants to share experience, knowledge, opinion, and valuation of purpose – everything that is required to have long-term continuity in their business rather than, say, meeting the P&L or securing their bonus.

We teach participants to make decisions when they need an intellectual assessment and a social understanding of their company and its business environment. It’s a crucial part of the programme.

We don’t try to teach participants how to trade – they already know how to trade or are familiar with trading. However, the programme is not only for trading companies. We have participants from commercial, functional and risk roles in banking, inspection, and shipping.

How long does the executive program last?

We have a three-and-a-half week physical, full-time class exposure spread over six months and three locations. We start in Rotterdam in the Netherlands. The first three days are onboarding because participants come from different companies with different functional roles. We want first to make them comfortable with each other so they can learn from each other.

It’s different from a purely academic university classroom. There is much more transmission of existing ideas in an executive programme than in a master’s degree. Here you want to facilitate the exchange of opinions and experiences and stimulate inter-generational dialogue with the current business leadership or industry veterans.

We do personality assessments and speed dating for the first three days. It includes a Marine course where participants spend day two in a boot camp solving annoying problems. Professionals from the Marines lead the day, building teamwork.

How many people are there on each course?

We have a small group of about twelve to fourteen people. We could go to a maximum of 16 or 17, but no larger because otherwise, you would get cliques – and we wouldn’t have the bandwidth to give each participant the attention that we want to provide them with.

We then do a whole weekend, moving into the four modules I mentioned. We structure each day as Understand, Apply, Reflect.

How does that work?

If we have a class on geopolitics, we start the morning with Understand. Typically, a university professor would provide some theoretical, conceptual understanding. The second part of the day is Apply, where everyone works on an assignment, business case or role play, applying what they have learned to their business and presenting the conclusions to the others.

The last part is Reflect, where we typically have the C suite in to give a campfire talk, reflecting on their own experience and moral dilemmas. On the fifth day, participants begin work on an integrated business case that will last throughout the programme. They advise on an investment in an asset, considering geopolitical and sustainability risks. They present their progress in a scenario plan for their business line or company for 2040.

Traders typically look 12-18 months ahead, but our participants are working towards taking leadership positions in their companies. They need to have a long-term perspective and take a strategic approach. It’s not about their daily P&L. They learn to strategize around uncertainty. And we force them to mobilize knowledge. Have they talked with their risk guy? Have they had coffee with their strategic suppliers or customers? How are they looking at the world in the future?

To become a leader in a company, you need to have a long-term, strategic perspective, and you need to have the courage and drive to mobilize assets within your organization and convince others to move in a particular direction.

How is the executive course split geographically?

This year, we did the Rotterdam portion in January and the Colorado, Denver portion with the JP Morgan Center in March. Denver has the same four topics but with an American perspective. We conclude in Singapore with an Asian view.

I can understand Singapore, but why Denver?

Denver is not an international commodity place, but it’s a domestic one with renewables, oil, ags, and mining. Most commodity professionals know New York or Chicago. These international places are lovely to party in, but if you want to understand America, you need to penetrate deeper into the heartland. And the partnership is with an established centre at the University of Colorado, the J.P. Morgan Center for Commodities and Energy Management, with strong business ties across North America. The Rocky Mountains add to the scenery.

Is the course multi-commodity?


How is your gender split?

It’s typically about 40 per cent women and 60 per cent men. Our supporting companies are outspoken about gender balance and are keen to have women in the programme.

Who pays for the executive course? Do companies typically sponsor their employees, or do individuals pay individually?

Companies overwhelmingly sponsor their employees and meet their costs.

Do new people join in Denver and Singapore?

No, participants follow the programme from beginning to end. It’s the journey together that matters.

How many different nationalities are on the course this year?

This year, we have participants from Kenya, Nigeria, Italy, Germany, the Netherlands, the UK, and Switzerland. I think that’s it, about five or six nationalities.

What is an example of something you learned while doing the programme?

I once asked one of the programme’s contributors, an international trading company COO, about his best trade. He told me that he remembered the worst trade he had made but couldn’t remember the best trade because he was still looking for it. The best trade was still to come, but the worst rate he will never forget. For me, this was an excellent message.

So that is your executive learning course. Tell me a little about your master’s programme.

We offer a commodity elective for our MSc students in our business school.

Like elsewhere in Europe, we operate the Bologna system in the Netherlands. Students do a three-year bachelor’s degree and a one-year master’s degree. They can then do an MSc in a business school. The average age of our MSc students is around 23 years old.

Within our business school, we provide an elective course. It is what the name implies; students need to choose it. It is an introductory course in commodity, trade, and supply networks.

Everybody in the business school follows their own MSc programme. They can pick their verticals, for example, supply chain management: finance, marketing, strategic management, et cetera. They also need to choose horizontal electives.

For the last seven years, we have had around 50 to 60 students per year who do the commodity elective. We dive into the mechanics of the commodity business and the culture. What does it take to be a trader? We tell them they won’t become a trader just like that. We also tell them that trading is not for everybody, but plenty of opportunities exist other than trading. Trading companies need analysts, operators, finance, et cetera.

We want to transmit to them that there is a mechanism – commodity trading – in the world economy that impacts their daily lives but is poorly understood. We teach them how it works and explain the skills they need to succeed in the business. It’s an enormous eye-opener for them.

We bring in outside practitioners to share their experience. It’s not a business you can learn from a textbook. Each year some of the students say, “This is the business that I want to be part of.” And then, I have achieved my goal.

Why not a full master in commodities; why an elective?

A couple of years ago, when I addressed the option of a full MSc in commodity trading, the Dean of the Business School said, “Wouter, this is not so straightforward. You need to build content and a reputation of excellence while at the same time doing your own marketing and recruitment and navigating university politics. To be accredited as a full master is an intense and cumbersome process. My advice is to start building content and align with faculty through our elective system”. It was valuable advice, as formalizing a university education is not easy. Indeed, I can tell.

Also, students who have finished their bachelor’s degree are typically 20 years old. Most don’t yet know what they want to do in life. They may know they want to do something with supply chain or finance but aren’t yet committing to a niche business like commodities.

Our commodities elective is one of the most popular in the business school. About 60 of our 400 students choose it each year.

How would a student in France or Spain who has finished their bachelor’s degree apply to the Rotterdam School of Management – and take the commodity elective?

You must apply and be accepted as a full-time MSc student in the business school. You can then choose the commodity elective.

How much does a master’s degree cost? I imagine the students must finance it themselves.

Yes, they do. However, the EU subsidizes MSc programmes for EU citizens. If you’re an EU citizen, you pay less than €3000. If you’re a non-EU citizen, it costs around €25,000. You must pay your living expenses on top of that.

Do many of the Rotterdam School of Management flow from Erasmus University, or does the majority come from other universities?

If you do your bachelor’s degree here, it’s logical to continue with your master’s here. However, we have students from other European universities who join during the Bachelor of International Business Administration. Our business school and the university are well-ranked.

In addition, there are a lot of exchange students who are full-time students in universities in Brazil, Hong Kong, Shanghai, or Canada that have an exchange structure with Erasmus University. It’s a peer-to-peer exchange. All universities have them.

When I started at Cargill, they wanted people straight from bachelor’s degrees. It didn’t matter what bachelor you did – it could be music, divinity, or ancient Greek. Cargill wanted to train people themselves. Is that still the case, or are the trading houses now looking more for MSc students?

I can resonate with this line of thinking. I advocate making Batchelor students aware of possible careers in this great industry. And there are always people that already have an appetite for commerce at a young age. And the younger recruits are, the more you can form them.

But I also think it is changing. The commodity trading business has become more complex. Companies will never refuse a candidate just because he has studied ancient Greek, but they are increasingly looking for candidates with a more analytical and commercial bent.

Do you receive financial support for the master’s programme from trading companies?

The academic programme is subsidised, so we cannot monetize the course. The trading houses provide educational support by giving classes on trading, hedging, shipping, or what it’s like to be an operator.

In addition, we launched the Erasmus Commodity & Trade Centre (ECTC) in January. We formalized our activities into a dedicated centre within the Erasmus family. Our mission is to nurture ideas and talent for tomorrow’s trade. We do this through education and applied research and by building a community and an international learning platform. As I mentioned, merchants founded Erasmus University, and an endowment from industry partners enables us to achieve our mission and ambitions.

Who are your partners?

Cargill, Cefetra, Count Energy Trading, Eneco Energy Trading, ING Bank, Interfood, VARO Energy and Vitol.

What would be your elevator speech about why a) somebody should do an MSc with you and b) choose the commodity elective?

We are hands-on and business minded. Our course is theoretically informed but practically driven. We aim to give our students real-world exposure to commodity trading, from pre-trade analytics to contract execution.

We are ideally placed to do that because we have the entire ecosystem in Rotterdam. We can show students the port operations, the tanks, the storage facilities – warehouses full of metals or soft commodities. We can give our students the look and feel of a physical trading operation. And we are internationally connected.

We have been running the commodities elective for MSc students for seven years, and it has built a solid reputation. Students now come from all over Europe.

Are the courses in English?


What about sustainability?

Sustainability is an essential element of our business school philosophy. We look at how to measure and monitor sustainability and guide sustainability into future leaders’ strategy, taking a more systemic, planetary boundaries approach.

We also look at the moral and ethical questions that crop up. There is sometimes a conflict between the trader and his company. A trader might want to do a deal to maximize his P&L, but a company will take a more comprehensive view to ensure the trade complies with all the regulations. It will also want to protect its reputation and brand.

At the same time, we emphasize that hunger for commerce, risks, and adventure drives the business and defines the business culture.

What do people typically do when they have completed their MSc?

Many of our graduates go into commodity-related companies, although most will not go immediately into trading. Operations and execution in physical trade are what this port city is most about. It depends on the employer, of course, but the old idea of “sink or swim” is less prevalent than it used to be. Most companies now initially put graduates into support functions such as analytics, finance, shipping, or contract execution.

There is a high demand for our MSc graduates. The sector is short of talent. Our students will not end up unemployed at the end of the course.

The business school is delighted with student demand, and the business is delighted to have a pipeline of new talent. It is a win-win.

Is there anything you would like to add?

People underestimate the relational aspect of making things happen. It fascinates me. In a company or team, you have a bunch of people who need to engage with, understand, and trust each other fully. These relationships are the essence of business. They spur the exchange of ideas, cultural understanding, and awareness about different parts of the world.

Money is a reward, but relationships drive businesses forward. It holds for me in setting up the Erasmus Commodity & Trade Centre. I had to deal with business executives, university executives, and professors and align around a common objective while building meaningful learning content. People matter. They give you reflection, trust and can push you in the right direction.

Finally, I would like to thank Reinette Sluijk, our programme manager in the Executive Programme Leadership in Commodity Trade and Supply Networks. She has been foundational to the programme, bringing ideas into execution, and has made a tremendous difference!

People – and personalities – matter.

That’s all the questions I have. Thank you, Wouter, for your time and input.

© Commodity Conversations ® 2023

A Conversation with Charles Funnell 

Good morning, Charles, and welcome to Commodity Conversations. After an initial experience working in Paris as a broker in the inter-trade physical sugar market, you moved to Durban as the South African Sugar Association’s export manager. SASA was, and I believe still is, the central selling desk for South Africa’s sugar industry. What did the job entail?

It entailed selling about one and a half million tonnes a year of raw and refined sugar to the world markets. We had close relations with some Far East raw sugar refiners, and we gradually built up a white sugar sales book to East Africa, particularly in containers.

It was an exciting role because it combined both futures and physicals. Those are the best roles for a trader because you see how the two interact, giving you a good insight into price discovery. During my three years at SASA, we exported almost five million tonnes. It was fascinating developing new markets and new relationships with the trade and with the destination.

Cargill headhunted you, and you moved, I think, to the Philippines. Is that right?

Yes, I did – as a physical sugar merchandiser and to manage the company’s sugar business there. Cargill wanted to develop their sugar operations in the Philippines with domestic distribution, imports (when the country needed them), and to be involved in some of the US Quota exports. I was there about a year and a half before Cargill brought me back to Geneva as their Structured Trading Manager.

What is structured trading, and how did you manage it?

Cargill had sugar terminal facilities and elevation in Brazil. My job was to develop a downstream sales book through long-term structured contracts to provide the material for the trading team to leverage between origin and destination. Most contracts had quite a bit of optionality on both physical and futures. It’s an extended value chain with plenty of risks to manage.

It was a fascinating job because it linked origin to destination. We had some great customers; visiting their countries was an authentic cultural experience – and insightful into doing business the right way.

Was it more of a merchandising role or more of a customer relations role?

It was both. You must open doors to be able to trade. You need customer skills to develop credibility with customers for them to say, “Yes, let’s become trading partners.” The first cargo is often the hardest. It’s about getting your foot in the door with that first cargo, creating the access and then bringing in the trading cavalry.

My role for the first year and a half initially focused on opening doors and developing longstanding relationships. The subsequent years were more focused on trading around the contracts. It was the best role I could wish to have because it combined the people contact with some good usage of trading skills. Structuring a contract took time and energy, but it was exciting.

How long was an average long-term contract?

It could vary between one year to three years, primarily for three.

Cargill is famous for training their traders. What did you learn from Cargill?

I came to Cargill at a slightly later stage than most. I had done a reasonable amount of trading at SASA. I honed those skills at Cargill. Improving my trading skills and learning new ones was the best part of Cargill.

Cargill taught me the value of optionality. It taught me to always look at a trade from a risk-reward perspective, to take out the emotion, and to seek out value.

I sold to many end users – some of them wealthy families or family-owned companies – who didn’t have to trade. As a trade house, you must trade to exist. It makes a trade house creative in a positive way, seeking out trades that have an optimal risk-reward profile and then following through on the opportunities. Developing the proper risk-reward mentality was crucial to being successful.

After seven years with Cargill, you joined Aisling, one of the most significant and successful commodity hedge funds at that time. What was it like moving from a trade house to a hedge fund?

You can apply the skills you learn in a trade house to a fundamental hedge fund. Most of the people at Aisling were from Cargill, so we shared the same language and way of looking at markets.

At a trade house, you have long-term contracts and a physical flow. You arrive on day one at a hedge fund with a blank paper. You don’t have assets, so you can’t trade around them. You must create value in your own space, which for me was soft commodities, specifically sugar.

I was fortunate in that I moved there in 2009, the start of a bull run. Sugar had been flatlining between twelve and fourteen cents per pound (c/lb). Between 2009 and 2011, the price rallied to 30 c/lb, fell to 14 c/lb, climbed to 36 c/lb, crashed to 20 c/lb, and then retraced to 30 c/lb.

At a hedge fund, you must do your analysis. You must have contacts and put on risk, even though you could be wrong and lose a chunk of money. Once you’ve put your pillars in place, put on that risk, and made a positive PNL, you gain confidence. A hedge fund allows you to do things you wouldn’t be able to do in a trade house. You’re given a lot more risk to manage.

Some top traders from Cargill and elsewhere have recently moved to hedge funds. Would you recommend a physical trader move to a hedge fund?

I would recommend it on two conditions. First, they have at least 15 years of experience in a trade house where they have learned the ins and outs of trading. You don’t want to go to a hedge fund at 25.

The second element is that you must put on risk. Doing that in a trade house is usually a team decision, and you get pulled along. If you put on risk in a hedge fund, it’s all on your shoulders. You must accept that level of responsibility where it can go wrong, and it can go right, and it may be a volatile ride.

You must have a significant risk appetite and sense of independence to be the right fit for a hedge fund. Someone once asked if I could ever relax, to which I replied that it was only stressful when the markets were open. I always slept well at night!

Your next move was to Dubai to head up risk management at Savola. Could you tell our readers about Savola and what commodities you managed?

Savola is the largest food company in the Middle East. It is a Saudi company, well organised and well-established in its markets, particularly in Saudi Arabia and Egypt. Savola buys about two million tonnes of sugar annually for their refineries and about a million and a half tonnes of edible oilseeds. My role in Dubai was to manage the price risks in those flows.

Were you responsible for procuring those two commodities, or did you oversee the hedging and risk management?

Savola has a professional procurement team. I was involved in procurement, but we didn’t do it directly. I managed a separate risk management team.

You stayed in Dubai for a year and a half before returning to Switzerland. Was that move back a personal or professional decision?

It was a bit of both. Savola decided to close the Dubai office and move everything back to Jeddah. I liked Dubai, but in my mind, it always had a time limit to it. It’s a fun place, but I missed Switzerland.

Would you recommend young people to move to Dubai for part of their trading career?

I would, and the younger, the better. It’s a young person’s town like Paris is a young person’s town. Dubai is suited to a sort of 25 to 40 period in your life. It’s a place where you have fun and work hard.

Dubai is a meeting point between East and West, and culturally, it’s fascinating. There are different nationalities, different things going on, and different ways of doing business.

In August 2014, you moved to Schaffhausen in the German-speaking part of Switzerland as director of Commodity Risk Management at Unilever. It must have been quite a cultural shock moving from Dubai to Schaffhausen and from a trading to a risk management role in a Fast-Moving Consumer Goods (FMCG) company. How did that move go?

It went very smoothly. Schaffhausen is a lovely place to live and work. Commodity markets are stressful, but Switzerland allows you to have stress in the day and a more relaxed environment in the evening. It is an excellent combination.

Moving to Schaffhausen and a large multinational suited me well. Unilever has less trading appetite than a company like Cargill but is close to commodity markets.

I enjoyed the broader range of commodities. Until then, I’d done sugar and edible oilseeds, but I handled other things like dairy, cocoa, and some metals at Unilever. It was intellectually stimulating to learn new commodities and meet new people. I managed about eight or nine commodities for the company globally.

Which was your favourite commodity?

Sugar is my favourite commodity, partly because of the people. You might be surprised to hear that the dairy sector is my second. It is fragmented and global, with various international exchanges. It’s a lovely industry with great people, and so quite like sugar. You can also have lots of fun in cocoa if you pick the market right.

What is the difference between a trader and a risk manager?

For me, a trader and a risk manager are similar; if you trade, you must know how to manage risk. Risk is at the heart of it all. You start with risk, and then off you go. To be a successful trader, you must understand and appreciate risk to create a positive and consistent PNL by mitigating the bad trades and maximising the good ones. It uses a more offensive approach.

As a risk manager, you also focus on risk and reward either for hedging decisions or putting on a trading position. It is more of an approach to assess what can go wrong with either decision and put a plan in place to limit losses and capture gains. As a risk manager, I would say you have a broader appreciation of market risk, which in today’s volatile environment, is a more suitable way to approach trading. It uses a more defensive approach.

Okay, what’s the difference between procurement and risk management?

There’s a big difference. The risk manager knows the commodity markets and appreciates risk. The procurement manager knows the process but often has no notion or appreciation of risk.

At Unilever, the risk management team were part of procurement, but the company separated purchasing procurement from risk management. It was sometimes difficult for a procurement manager to understand the risk manager.

To be clear, when you’re talking about risk management here, Charles, you’re talking about commodity price risk management.

Yes. We weren’t responsible for other risks, such as counterparty risk. That was the procurement manager’s job.

FMCG companies are structurally short of commodities. Are the FMCG companies forced to trade the markets?

As a risk manager in an FMCG company, you look for price certainty and to mitigate price volatility. It is a very different mindset from a trader in a trade house who seeks out risk in price volatility for profit maximisation.

The objective of a risk manager in an FMCG company is to provide as flat a price line as possible, so the business can lock in margins over the medium and long term while at the same time using the volatility in the market to make the company more competitive.

An FMCG company wants you to flat line, but to be competitive, it needs the bumps – the ups and downs of volatility – to pick the right timing to cover hedges. It’s a delicate balancing act.

Commodity risk management isn’t just about beating an internal forecast. Nor is it about ensuring there’s no inflation from last year’s cost price. Inflation is the same for everybody. If wheat or sugar prices have gone up from last year, they have gone up for everyone.

To look at it from a pure procurement mindset is missing the point that it’s crucial to mitigate costs by buying at an opportune time, irrespective of inflation.

Consumer companies must have a strategy and build governance around it. They must have a mindset as to what is making them competitive. Beating last year’s price or the end-month forecasts is insufficient.

How do FMCG companies trade the market? If they thought, for example, that the wheat or sugar price would go up, do they buy further forward than they would otherwise do? And if they thought the prices would fall, they would buy more hand-to-mouth. Is that how it works?


I suspect FMCG companies are not as fast-moving as the name implies. How quickly could you get your senior management to take the trading decisions?

It would be quicker and easier to get approval when prices are low. It is difficult to convince senior management to put on hedges when the market is rising. It’s challenging for FMCG companies to understand why they need to pay up – and why the price might not revert to mean. It can cause delay, and a delay in an upward-trending market will mean additional costs. It can be challenging, but people trust you once you have a good track record. It speeds up the decision-making process.

The challenge is often with the structure itself. FMCG companies are heavy on people. It can take time to get everybody’s buy-in.

Companies must trust their risk management teams as they trust their finance teams. It’s an area of development in many FMCG companies.

How do you know when a price risk manager is doing well? What are the benchmarks?

It’s easy if you are a risk manager in a trading company – you look at the P&L.

A risk manager in a procurement function doesn’t have a clear PNL. You can look at it in various ways, but you typically base it off a market average versus where you hedge. You can also look at it versus the cost of the additional inflation or deflation that occurred because you made those decisions.

In all honesty, the area is ill-defined. We looked at it from different angles over the years, but there’s no correct method because there’s no P&L per se. You’re trying to beat the market and to keep it all as flatlined as possible for the business.

The rest is about whether you communicated well and involved the right people in the decision process.

What was the most challenging part of your role at an FMCG? Was it getting the markets right or explaining how commodity markets work to your colleagues?

Considering their volatility, we had a good run on most commodities, particularly dairy, cocoa and sugar. The challenge was more the education process, getting the teams to understand the markets.

In most FMCG companies, people move around every three or four years, so you start again each time someone new comes along. It can be frustrating to rinse and repeat, having built up a certain amount of knowledge and buy-in. FMCG companies like to move their employees between different roles and geographies. Traders tend to stay in their markets for many years. I think FMCG companies should look at more longevity in specific positions.

After over seven years with Unilever, you established your own consultancy company – CFCommodities – in January 2022. Could you tell me a little bit about that?

I had wanted to do it for a while, and I had the backing of some long-time customers. There are three aspects to what the company does today.

The first is to offer a boutique risk management advisory to industrial clients in sugar, grains and dairy. I provide insights into managing risk, pricing, and physical flows. Not all commodities trade the same way, so understanding the dynamics of each (volatility, liquidity, fundamentals) is essential to provide insightful advice.

Second, I offer a consulting service to some large management consultancies who want to understand how commodity price risk management works in the consumer segment.

Third, the company trades on the markets and provides a trading service to customers. It’s been a busy and active time, and the commodity markets have provided plenty of volatility and opportunity in the last 15 months.

So, the company takes positions on the market? Doesn’t it take away your independence as an advisor?

I don’t think it does. As Scott Irwin mentioned in your recent conversation, you must have some skin in the game to be a good advisor – but not enough to get flayed. I tell my clients what positions I take, my rationality for taking them, and my estimated risk reward. As Ralph Potter emphasised in his comments, trading is risk management. It is my speciality, and I don’t see any conflict of interest—quite the reverse.

Isn’t it difficult to follow multiple markets and be an expert in everything?

The best traders and risk managers know how little they know. As Socrates, one of history’s greatest philosophers, famously said, “All I know is that I know nothing”.

I like to think that I understand markets. I also have hands-on experience in the physical flows of the commodities I follow. There are some excellent, expert market analysts out there, and I buy in their services. I like the structure I have. It works.

To sum up, you started as a broker in Paris but moved on to become a sugar exporter in Durban and a merchant in Manila. You were a structured trade manager and a hedge fund trader in Geneva before becoming a commodity risk manager, first in Dubai and then Schaffhausen. You now have your own company. Which part of your career did you most enjoy?

There were three roles I particularly enjoyed before starting my company.

I liked my experience in South Africa. I was young to have that responsibility and exposure to the markets and combine futures and physicals. It was nice having a good industry behind you.

The second role I liked was being the structured trade guy at Cargill. It had everything I would want in a job: customer contact, analysis, and trading. I also loved learning more about managing risk and optionality. It ticked all the boxes and was in Geneva, a lovely city.

Finally, the hedge fund was challenging, exciting, and rewarding. A thrill a minute, and we even took delivery off the exchange twice!

Right up there is what I do now, running my own company. I can decide what to do and how and where to do it. I felt positive and happy from the day I started. It links everything I enjoy: trading, some excellent and reliable long-term customers, advice, analysis, and travel. I couldn’t ask for a better job.

I talked with Jeremy Reynolds a while back. He recently set up a shared-service company offering trade operations and contract execution. It seems you are doing the same but with a price risk management service. Is this move to shared services a coincidence, or is it a general trend?

It makes sense for some companies to outsource rather than hire. Using shared services, you access experienced and credible people. It is perhaps something the large consumer companies should use more, particularly in today’s environment where the markets are getting more volatile. It could be in their interest to buy in some of this off-the-shelf expertise.

Thank you, Charles. I wish you every success with your company.

© Commodity Conversations® 2023

This is part of a series Commodity Professionals – The People Behind The Trade.

A Conversation with Scott Irwin

Scott Irwin is the Laurence J. Norton Chair of Agricultural Marketing, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign. He is one of – if not the – most respected agricultural commodity academics globally.

Scott, could you tell me briefly about your new book, Back to the Futures and what prompted you to write it?

The book’s purpose is to be an entertaining way to learn about commodity futures markets, emphasising the fun part. It has a serious teaching purpose, but it’s wrapped in, hopefully, entertainment that keeps the reader moving along.

Why did I write it? I have been teaching, writing, and researching commodity markets since I was a senior in high school. My interest in the markets goes way back. I’ve been involved in them as an academic my whole adult life.

Most people don’t understand how markets work. I wanted to write something to explain how commodity markets work, but I didn’t want to do another academic project or write a textbook.

It’s also my professional DNA. Every ten or fifteen years, I need to do something that challenges me and keeps me interested and energetic. Writing this book was one of those challenges.

Would you describe the book as a biography?

It has a memoir or autobiographical component, but it’s neither an autobiography nor a memoir.

I included the memoir material to make the book fun. I wanted to make it entertaining to entice the reader to learn about futures markets.

As a good friend told me, each memoir story is designed to be a market parable. Each one is intended to illustrate some part of the operation or functioning of commodity futures markets.

I introduce my childhood friend, Jack Hunter, and his daredevil, reckless behaviour early in the book. I’m as equally guilty as Jack was, but I use Jack as my stand-in for a speculator, taking unreasonable risks. A few chapters later, I introduce my father, a farmer, to explain the concept of hedging. He struggled with that aspect of his farm business; his personal stories illustrate that.

You co-authored the book with Doug Peterson.

Doug is a close friend and a professional author with over 70 books to his credit.

About five or six years ago, I discussed the idea for this book with him. He loved drawing on my large inventory of crazy, insane stories growing up in rural Iowa. I would not have had the courage to write the book without Doug.

I knew that I needed Doug to achieve my objective of a fun way to teach people about the futures markets. After nearly 40 years of writing for an academic audience, I knew I didn’t have the skills to write the book I envisaged.


Did you have a target audience in mind when you were writing it?

My target audience was anyone interested in learning about commodity markets – someone with some knowledge and experience who would like to develop a deeper understanding of the markets. I view my core audience as farmers, hedgers, merchandisers, and agricultural commodity traders. I aimed the book at someone who would never read a textbook but wanted to learn.

Let’s talk now a little bit about you. You had two attempts to trade on the grain futures markets. The first was in August 1981 when you were a graduate student, and you thought that the market was overestimating yields. The second was more recently when you believed the market was overestimating acreage. You lost money on both occasions. What did you learn from those experiences?

The first was hair raising, a near-death for my graduate school experience. It taught me that I didn’t have the nerves to be a trader.

I was stupid to take those kinds of risks as a graduate student – it was insane. But it was a good lesson to learn without getting bounced out of graduate school. It taught me to stick to what I’m good at. I am pretty good at academics and research, but I don’t have the stomach to carry that financial risk. I’m just not built that way.

If you’d made money on that first trade, would you have persevered and tried to become a trader?

That’s an interesting question.

It was the classic newbie trader story. I made enough money in the first few months to be dangerous. I got blown out. I had considered buying a seat on the old Mid-America Commodity Exchange. Had I not been blown out, I may have done that. However, the odds of that happening were low.

Traders typically experience enormous volatility in their fortunes. I always like to tell people that if they want to understand what the trading process is like, go read Jack Schweiger’s first book, Market Wizards. You will shake your head at the financial calamity that most traders experienced before becoming successful. I don’t think I had the fortitude to push through that. I didn’t love it that much.

 I started trading again in 2010. First, I became a principal in a small firm providing real-time yield forecasts for US corn and soybeans. I believed it could give me the edge a trader must have to succeed.

Second, my father passed away in 2009. Our family still had a substantial farm operation, and I inherited the corn and soybean marketing for our farms back in Iowa, working with my mother. It forced me to be closer to the markets on a day-to-day basis.

Third, I believe that trading makes me a better teacher and a better researcher. It gives me a quicker awareness of emerging issues in the markets. My motivation was to have skin in the game, but not so much that you get flayed!

So, yes, I trade now a little, but only options.

Your book describes how your father repeatedly tried to beat the markets but failed. What was he doing wrong?

I believe he made a series of errors that most farmers repeat.

The fundamental purpose of hedging is to manage your risk, to reduce the fluctuations in your revenue over time. However, most hedgers work their positions selectively, looking to pick up some gain and extra return. Farmers aren’t unusual in this regard. They want to manage the risk exposure of their crops and livestock, but they don’t understand that you must have an edge to be successful.

It’s hard for farmers psychically because they’re so connected to their crops. They have an intimate knowledge of what’s going on in their fields in their area. It leads them to believe they have an edge about what will happen with supply. There is a maxim: don’t get caught looking out your back door. It was always a big problem for my dad.

As a farmer, you compete in an incredibly sophisticated, billion-dollar business where your opponents are more sophisticated than you. You must understand who you’re trying to beat.

If you’re going to play the game, you must be prepared for the ups and downs. Even if you’re beating the market on average over time, you will have significant drawdowns and big gains. Hopefully, a few big gains offset your losses.

I don’t think my father had the mindset to understand the overall purpose of what he was doing and how difficult it was to win the game of selective hedging.

Since my dad died in 2009, I do the marketing with my mom, who will be 88 in a few days. She would have made one heck of a good trader. Her instincts about the markets are better than mine. A good trader has an intuition that I can’t describe and a personality that can deal with the ups and downs. She has both.

You must also have a short memory to survive if you are speculating or selectively hedging. We’ve made some big mistakes in our marketing, but my mom always moves quickly onto the next opportunity.

 My dad wanted so badly to hit the highs. It’s a terrible mentality to win in this game. If we do a great job marketing our corn, we’ll get a better price of 20 or 25 cents a bushel than our neighbours. It doesn’t sound much, but if you do that for 20 years, man, it adds up.

Your mother was a better trader than your dad. It raises the question: why there aren’t there more women traders in the market?

Almost all US universities are now majority female, but, as far as agricultural commodities are concerned, I’m lucky if I get 25 per cent females. It is a puzzle to me that I do not understand. I see it changing, though, slowly. More and more females are going into grain merchandising, but it’s still not the 50 per cent it should be.

You mentioned that you need an edge to be a successful trader. What else do you need?

You must have an above-average ability to collect and process information.

Equally important is the right kind of psychological makeup. Probably the best typology for a trader I’ve ever seen is in the book Superforecasting: The Art and Science of Prediction by Philip Tetlock and Dan Gardner. It is one of my favourite books of the last decade. Being a trader is not necessarily the same as being a forecaster, but this book is about people who make predictions. A trader constantly makes predictions.

A good trader must have a Sherlock Holmes brain – an insatiable curiosity to dig into the facts and understand relationships – and not necessarily believe what everybody else thinks. It’s not a normal personality, the ability to believe in your own skills and attributes. But to be a great trader, you must have that kind of Sherlock Holmes personality.

Great traders must have a nimbleness of mind to know when they’re wrong and change their positions. I don’t think there’s any way to teach that.

Great traders are super intelligent people, but they also have the drive and psychology to take that cognitive frame of mind and implement it into trading.

The Super Forecasters Project suggests that maybe only one to two per cent of people line up with the potential to be a super forecaster or a super trader. It’s a rare set of skills.

At one stage in your career, you tracked market advisors and found that, except for Dan Basse, they added little value to the market. Why do you think that is?

First, let me say that even though they didn’t necessarily beat the market, it didn’t mean they didn’t provide value to their farmer subscribers. We believe that many farmers underperform in the markets. If you faithfully follow the advice of these services, at least you’d be average, which would be an improvement. As you can imagine, that was a challenging message to sell.

So why did these firms not consistently deliver value? I think it’s because they tended to be boutique shops without the resources to be competitive with the big grain trading companies.

You’re famous for solving what has been called the crime of the century in the grain markets. During the 2000s, wheat futures didn’t converge with the physicals at expiry. Most observers at the time blamed excessive speculation, particularly by the index funds. You found that it was a technical issue regarding exchange-stipulated storage fees: traders saw that the futures were worth more than the physicals because they had a cheaper cost of storage to carry them. My question is, why couldn’t you have asked one of the trade houses? After all, the trade houses were taking delivery of the futures.

We did try to talk to the big grain companies, but they weren’t talking. They’re highly jealous of protecting any perceived edge because they know how hard it is to win, even for them. They’ve got the other majors wanting to crush them all the time. Nobody would say, okay, Professor, I will sit you down and explain this to you.

They also had agendas regarding what they perceived as their commercial advantage in the delivery process. They maybe wanted to use the issue to drive significant changes in the contracts that they felt would have benefited them commercially.

The other thing is that this had never happened to anything remotely this magnitude or length of time. So even the big grain traders were slightly taken aback and unsure how to explain it.

I understand that you have a second book coming out soon on the role of index funds and speculators. Throughout your career, you have relentlessly tried to explain that speculators add value to the markets. Why is it so hard to get that message across?

Whenever fluctuations in commodity prices cause economic pain, there’s a natural, psychological reaction to look for a scapegoat. It’s a human emotion, and it’s repeated over and over.

There is also a fallacious belief that if you’re not engaged in the physical side of the market, for example, processing or growing corn, you are somehow a parasite in the economic system. It is the belief that you can only contribute if you’re actively involved in the physical side of the production and consumption of goods.

On top of that, there are spectacular stories historically – and they’re still sometimes occurring today – of attempts at market manipulation. It feeds into that anti-speculation mentality.

Now I have a question about high-frequency trading (HFT). You write in your book about the FBI investigations into the floor locals in the 1980s. The agency fined locals millions of dollars for front-running orders. Some in the physical trade argue that HFT funds have replaced locals in front running orders and spoofing the market by placing and cancelling large orders. Do you have a view on high-frequency trading? Do they add or distract value?

I don’t think that there’s any doubt that they add value. I covered the issue in a 2022 paper in my second book. It’s one of my favourites because we accidentally discovered something very significant. We examined how much commodity index investors paid for the monthly role in order execution costs.  We measured it back to the early 1990s for the GSCI (Goldman Sachs Commodity Index).

What we found was astonishing. Until 2007, index investors paid through the nose to roll their positions, but the cost fell significantly after 2007.

How do you explain that?

We don’t have a formal model to prove it, but it’s evident that it was the move to electronic trade. It was an 80 per cent drop in their order execution costs. Electronic trading with high-frequency traders is a vastly cheaper way to trade than open outcry.

We must learn what guardrails we need in this new world of high-frequency trading and electronic markets. It is a learning process. For the past five years, it has been our top research priority for my group here at the University of Illinois. It’s a big economic question.

You mentioned in your book that you are possibly better known now for your work on biofuels than on the futures markets. In 2007, a UN spokesman called biofuels a crime against humanity. The UN later withdrew that statement, but some still argue that biofuels are unethical because they raise food prices and cause hunger among the poor. What would you say to that?

Economically, it’s not a simple question to answer. It’s complicated on both the supply and the demand side.

Let me start on the supply side. The growth of biofuels has certainly raised prices, principally corn and soybean prices. I don’t think anyone can deny that, but by how much is a great debate among economists. And it matters. My view is it’s substantial for corn prices.

But what’s interesting on that supply side is that ethanol can now stand on its own two feet without mandates or tax credits. It’s competitive as a blending component in gasoline blends in the US. We wouldn’t use one gallon less if you removed the mandates. It’s not true for renewable diesel and biodiesel; both are wildly expensive relative to the diesel they replace.

The intriguing part of this – why it is so complex – is that many poor people in the world are subsistence or small-scale farmers who benefit from higher agricultural prices. High food prices hurt the urban poor – and there’s where the rioting and political problems occur. Out in the countryside, farmers quietly benefit from higher prices.

It’s not as simple to say higher prices hurt the global poor. It is a false statement on the surface. I’ve read country studies that suggest higher agricultural prices benefit some less developed countries, particularly those with extensive crop agriculture. Unfortunately, it’s a perspective few people want to hear, particularly in Europe.

I recognise that food price spikes hurt billions of people in less developed urban settings. Still, perhaps a more significant issue is that beggar thy neighbour export restrictions aggravate their suffering. When a country bans food exports to protect its domestic consumers, it transfers the price volatility to importing countries. It is a big problem.

Do you think biofuels have a role to play in the decarbonisation of the economy, or do you see the car fleet becoming exclusively electric?

I’ve been public in my views about the transition that we’re in, and I’m not particularly popular among farm groups and the biofuels industry. But you are not paying attention if you don’t believe that most of our surface transportation fleet will become electric. It’s coming. EVs are vastly better consumer products.

However, I believe the EV evangelists portray a faster transition than will happen. In the US, we have nearly 280 million internal combustion engines that we must depreciate. It is going to take decades.

Tractors began coming to the US in the late 1910s and early 1920s. It wasn’t until after World War II that tractors and not horses provided more than half of the power in US agriculture. There was a lot of horse agriculture in the 1950s in the United States. The market for ethanol and gasoline will eventually peak, but these transitions take a long time at this societal scale.

The decline in diesel usage will probably be slower, but it will eventually go down. However, biofuels have an ace in the hole in sustainable air fuel (SAF). It’s a vast global fuel market. We will need liquid jet fuel for the foreseeable future, and biofuels will play an essential role in decarbonising aviation. They may also have a role in maritime shipping.

What about renewable diesel? The US has some massive plans, but does it have enough vegetable oil? And can trucks be electrified?

Let’s start with the last one. Can trucks be electrified? Probably, but I’m guessing it’ll be slower because the amount of power you need will make the batteries so heavy they’d be inefficient, at least for a while. Short-haul delivery trucks will be electrified sooner; long-haul trucks and trains will take longer.

Regarding your question about renewable diesel, there is enough feedstock for the renewable diesel plants we’re building. If they all get built, we can supply them. But can we do it at a price that won’t cause a huge political controversy? We may price ourselves out of the exports of fats and oils.

I’m writing a lot about it now in my research. I’m sceptical that all the announced capacity will come online. I don’t think we will mandate enough demand through the RFS to justify all the plants we’re building.

I wanted to ask you about the courses your university offers in agricultural marketing.

We offer three courses at the undergraduate level.

The first is a popular freshman-sophomore course on agricultural marketing. We also provide junior-senior classes on commodity price analysis and commodity futures markets. And then we have the commodity futures markets course, looking at the markets and how you hedge and speculate in them.

We also offer three courses at the graduate level. One covers time series econometrics applications in commodity futures markets. We have a second one that covers traditional supply and demand and trade policy in agricultural markets.

And then, we have a unique and fantastic course in our PhD program, a one-semester seminar course where students read as much cutting-edge literature as they can in a semester. It’s kind of the jumping-off point for students doing dissertation research.

Last question. What advice would you give a young person looking for a career in agricultural marketing?

First, get as much academic training as you can. We have recruiters constantly engaging with the students at the undergraduate level. We never have enough Master students for the market demand.

Second, while you’re getting that training, do as many internships with grain and trading companies as possible to find out if you have the profile for the business.

Third, I tell my students to start following the markets and the daily market narrative. Get engaged in what I call the everyday market conversation.

Fourth, read as much as you can. I tell my students to start with your book, Commodity Conversations. I then ask them to read The Economics of Futures Trading by Thomas A. Hieronymus, followed by The World for Sale by Javier Blas and Jack Farchy.

I’m honoured to be in the top three. Thank you, Scott, for your time and input. It has been a fascinating conversation, and I have greatly enjoyed talking with you.

© Commodity Conversations ® 2023

My last Ag-Trader News

US grocery prices may finally be falling. The March CPI showed seasonally adjusted prices for food consumed at home dropped 0.3 per cent compared to February – the first drop since September 2020.

The news from the UK is less encouraging. UK food and drink inflation reached 19.1 per cent in March. The Guardian, predictably, blames it on corporate greed.

The Black Sea

Russia says it will not renew the Black Sea grain export corridor beyond 18th May unless the West agrees to lift restrictions that hinder its agricultural exports. Russia’s foreign minister says that, so far, practically nothing has been done.

Analysts expect exports through the corridor to wind down gradually before the end date. Meanwhile, Ukraine is looking to bolster exports through the three ports in the Danube cluster.

Russia had already suspended inspections of vessels waiting to exit or enter the Ukrainian Black Sea for two days last week, blaming the UN and Ukraine for failing to register ships correctly.

The UN said it was talking intensively to the parties involved. “It is in everyone’s interests to keep the initiative going,” it stressed, saying it benefited “millions of vulnerable and low-income households”. Russia’s invasion of Ukraine is already causing a global shift in the trading of grains and causing hunger in importing countries.

In an attempt to regularise trade policy after Poland, Hungary, Bulgaria, and Slovakia announced bans on food products from Ukraine, the European Commission announced emergency preventative measures, including €100 million in compensation for affected farmers. Until the end of June, Ukrainian wheat, maize, rapeseed, and sunseed entering Bulgaria, Hungary, Poland, Romania, and Slovakia will only be allowed for re-export.

Russia will harvest about 123 million mt of grain this year, including 78 million mt of wheat. It compares to a record grain harvest of 153.8 million mt in 2022, with over 100 million mt of wheat. This year’s figures include Ukrainian territories claimed by Russia.

Cargill has warned that Russia’s increased control of its wheat exports threatens to obscure prices and curb efficiency in the global grains market. With international grain traders pulling out of Russia, the Russian farming conglomerate Ros Agro looks to expand.

Other market news

Southern Europe’s farmers face a crisis following months of drought. Some Spanish ecologists warn the country may soon be unable to sustain cereal crops such as wheat and barley.

The return of the El Nino weather phenomenon, fuelled by climate change, could result in record temperatures in 2023 or 2024.

Following a record drought, Argentina has met with the IMF to reschedule its $44 billion loan programme.

Australia will suspend their WTO complaint against China after Beijing agreed to review its tariffs on Australian barley.

With climate change threatening Arabica coffee production, producers are experimenting with liberica, another coffee species.

EU beekeepers have called for stricter rules against honey laundering – the imports of honey laced with sugar syrup.

Company news

After posting a record net income of $6.7 billion in the year ended 31st May 2022, Cargill’s earnings over the following nine months were $3.2 billion. Revenue for the period was $133.5 billion, compared with $165 billion for the preceding full year.

Institutional investors in Nestlé are pressuring the company to become less reliant on unhealthy products, warning that consumers’ overconsumption of packaged goods with limited nutritional value poses “systemic risks” to financial returns.

Private-equity funds bought a record 786 food and beverage manufacturers worth $32 billion in 2021, believing they would be profitable no matter how the economy fared. Higher labour costs, supply-chain disruptions, and surging inflation have upset those predictions.


The European Parliament has approved legislation to ensure that imports of various products, including palm oil, coffee, soy, wood, cattle, cocoa, and rubber, are deforestation-free. Critics argue it will be almost impossible to implement the law.

The Dutch government has paused work on its programme to shut down farms to reduce GHG emissions after the Farmer Citizen Movement (BBB) performed well in provincial elections. The Dutch minister for nature and nitrogen policy said there are no easy paths to cleaning the environment of excess nitrogen, and farmers’ suffering was unavoidable.

The FT warns that the EU’s pledge to hit net zero emissions by 2050 may be at risk unless Brussels brings farmers on board.

US President Biden has pledged $500 million over five years to fight deforestation in Brazil, making the US one of the largest donors to the global Amazon Fund. Congress is unlikely to approve the measure.

A new study argues that the world’s agricultural systems could feed 20 billion people but could wreck the planet. The FAO argues that there are too few women in agriculture, and they still occupy only a marginal place.

Unilever says that the procurement profession is going through a midlife crisis as sustainability and procurement become more integrated into the regulatory landscape.


Scientists have found a way to break down the tough lignin in plant material using anaerobic fungi, potentially providing a new path for cellulosic ethanol.

Germany’s biggest biofuels producer says that if we want to save the planet, we should give up meat before we give up biofuels.

Finally, Maersk is celebrating the launch of the world’s first green methanol-powered containership.

© Commodity Conversations ® 2023

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Editor’s Note: I am sad to say that this is my last news summary. From now on, I will concentrate on interviews and books. Thank you for your continued support.

A Conversation with Ralph Potter

Ralph Potter is an ex-Green Beret, the American equivalent of the British Special Forces. For the past forty years, he has been an active trader and broker on the world sugar market and has mentored many of the sugar market’s most successful traders.

I met Ralph at his local pub in Surrey, England and asked him how he got into the sugar business.

I got into the sugar club by accident. I had returned from the Vietnam War and was attending the University of Illinois. I had some money to invest. My grandfather was a farmer, and when I was a boy, I used to go with him to talk to farmers about the price of corn. I learned at an early age that the price would go up and down.

While at university, I seconded myself to a small grain and feed merchant. I first noticed them because their parking lot was full of Cadillacs, Mercedes, and Porches – and even an AC Cobra. That was in 1971, a very auspicious time to learn to trade grains. They paid me something but not much. I worked with a rag in one hand and some chalk in the other: a girl would call out the prices from the telex ticker tape, and I would erase the old price and mark up the new price on the board.

The room was half the size of a tennis court with eight desks. At each desk was a grain merchant with an assistant, all on several phones to various clients, farmers, elevator operators, chick feed buyers, that sort of stuff. It was mainly for corn, soymeal, and beans. They taught me a method I have used for 44 years, with a few improvements. The heart of the method is technical analysis and management of the position.

After a few months, I was short of two soybean oil contracts. At the weekend, I went out to play soccer, and frost was all over the ground – it was 9th September. That cost me half of my trading account. It was an expensive lesson.

I met a guy in a bar who had inherited $8,000 from his grandmother. He bought copper. His trading account went from $8,000 to $60,000. Remember that at that time, you could buy a house for $14,000. He ended up with a debit of $4,000. He had no system of money management. That was a lesson I learned from someone else’s bad habit.

When I left College, I ended up at Merrill Lynch as a registered commodity broker, but I struggled to get clients in the grains. I was too young; it felt that you had to be at least ninety to be respected in the grain markets!

By some accident, I ended up with ADM’s sugar account; no one else in the office wanted it. I knew nothing about sugar, but ADM gave me a chance. Once I had one sugar client, I concentrated on the sugar market and found it easier to win other big sugar clients.

What lessons did you learn at that time?

Being in the military taught me two things. First, a bad plan poorly executed is better than no plan. Second, you should only commit reserves to exploit and consolidate victory, never to salvage defeat. Another way of saying that is, “Don’t throw good money after bad.”

I once asked a friend how he traded. He replied that he tossed a coin to decide whether to buy or sell.

“That’s it?” I asked. “That’s your trading system?”

“Yes,” he replied, “but I also have a rule never to take a losing position home overnight.”

It’s not the trigger that gets you into the market that’s important. It’s about managing that position once you have put it on.

There is a famous story about a speculator at EF Hutton who got his trading recommendations through a Coke bottle wrapped in tin foil; a coat hanger acted as an aerial that he claimed picked up trading recommendations from outer space. Of course, everyone ridiculed him.

At that time, people didn’t have screens, so they would come to their broker’s office and sit and watch the prices on the clacking electronic quote boards at the front of the room. When they wanted to trade, they would walk up to the order clerk and hand them their order on a slip of paper.

Most of these people lost money, but this guy had been trading for several years and was a rare success. He would receive a signal from his Coke bottle to, say, buy corn. He would lord it over everyone else if he were winning on his position. He enjoyed that. The net result was that he would let his profits run and not snatch them. But when he was losing, the others ridiculed him so much that he quickly exited any losing positions.

When a winning position gave back a certain percentage, he would quickly get out for the same reasons. So, money management worked even for a crazy person – someone who received trading signals from outer space.

Can you briefly explain how you trade?

I don’t want to explain it in detail, but it is all about managing the position and taking the whipsaws. A whipsaw is when the market moves through a specific price point. You put on a trade, but the market reverses again, and you must reverse that position. It is the way floor traders used to trade.

Most people try to trade in a way to avoid whipsaws. The average trader would rather lose money than get whipsawed. I embrace whipsaws. It is like trying to be a boxer without getting punched. No one likes getting hit, but you must let your opponent strike you on your forearms, shoulders, or gloves – a glancing blow. You avoid being smacked on the head but take the more minor hits.

What is the biggest mistake that traders make?

The biggest mistake traders make is snatching profits. There is a saying that no one ever went broke taking a profit, but that is a lie; people go broke snatching small profits that don’t offset their losses. People often grab profits expecting to return to the market again at a better price. They may do, but usually, the market runs away, and they either must chase it, or they don’t get back in.

The best thing to do if you have a winning position in the commodity markets is to take partial profits in a non-emotional manner. You reduce the size of your position, but you hold on to the core. Trimming, or reducing a position, provides you with a psychological way of holding on to your core trade.

What is a trader’s greatest enemy?

A trader’s greatest enemy is lack of discipline and succumbing to hubris – when you think you know more than the market because you have been lucky or succeeded in using your trading method.

The worst thing that can happen is when a trader thinks he knows something and disregards his rules. It can be when he has invested so much of his credibility – and so much of his personality – into putting on a trade, it makes it hard to exit. It’s hard to change your mind. That’s why you must have a risk point.

What makes a good trader?

The best traders are the ones who have unconventional vision and self-belief: to stick your neck out and have the guts to say, “I am going to commit my company’s money – or my investors’ money – to make this trade. It takes someone with exceptional self-belief. Most traders on a desk just want to keep their heads down.

But you must take the risk. You must have the guts to trade. You also must have an absolute disdain for the opinions of other people. You don’t have to tell everybody you think they are full of it; other people’s views mustn’t sway you.

To succeed in the markets, you must have a well-developed sense of fear: it will keep you in business longer than brilliance. Brilliance can desert you in critical moments. Some traders are naturals, but if nobody trains them properly, they blow themselves up and take everyone else with them.

You talk about risk management, but don’t you think that most companies have taken risk management too far?

No, I don’t. But I do think some companies have taken the process too far. Over recent years some of the more prominent trading companies have cashed in and gone public. As public companies, they find that they must comply with thousands of new regulations which can swamp the management.

Unfortunately, some companies no longer view a good trader as an asset. They consider them more as a liability – a risk. The creative guys get swamped with compliance, process, and management issues.

I could never work for a big company these days; I would be sacked within a year. There is a joke about an old trader interviewing for a job. “What do you think is your greatest weakness?” he was asked. “I’m too honest,” he answered. “I don’t think honesty is a weakness,” the interviewer replied. “I don’t give a damn what you think,” replied the unsuccessful candidate.

So, you have been happier as a sole trader?

I have traded significant positions for big trade houses and a couple of hedge funds, but I never aspired to be a multimillionaire. I don’t have the temperament or the drive. Every time I wanted something like a car or a yacht, I got it, but then I was happy with that.

The excess money I made I gave away to people who needed it more than me. I have enough money, even if my wife disagrees. I like being part of the sugar club, part of the team. That was – and is – more important to me.

What I enjoy now is teaching. I am happy to give something back to the sugar business; to teach young people about markets. I try to show them how to use technical tools and position management in combination with their fundamental trading strategies.

Remember, the trade houses’ primary role is efficiently moving food around.   If I can help them to do that profitably, then I am happy.

Do traders manipulate markets?

Good traders don’t need to manipulate markets; they can make money on their abilities. Weak traders may try to manipulate markets, but it seldom ever works, or if it works, it only works for a limited time. The ceiling quickly falls in on them.

But what if traders get together – could that give them the market power to do it?

Maybe for a while, but the price has a habit of going where it wants. You may stop it for a time, but you will never stop it for long. If you push prices up, extra supply will come out. If you push prices down, supply will dry up. Traders invariably lose money if they try and push prices away from where they should be. I have seen some big companies try and fail spectacularly.

It is difficult to manipulate a market. It is much easier to manipulate a government, but then you don’t have to be a trader to do that. Everyone can manipulate a government; it’s called democracy.

Thank you, Ralph, for your time and comments.

© Commodity Conversations® 2023

This interview is part of an occasional series I call “Classic Conversations” which was first published in my book The Sugar Casino, available on Amazon.

A Conversation with Jerome Daven

Good morning, Jerome, and welcome to Commodity Conversations. Could you please tell me about yourself and your career so far?

I am Swiss and grew up in a little village in the Swiss Alps. My mother would probably tell you that when I was growing up, I spent more time on the ski slopes or the hockey rink than in the classroom. However, I was good with numbers and decided to go into accountancy, joining KPMG. I then joined PWC, where I passed my accountancy qualifications.

One of my main audit clients was an oil trading company, and I spent a lot of time in their offices. I quickly became interested in supply chains and trading. I found it fascinating to be able to put together the global news that I was reading in the newspapers with my day job. Geopolitics has always interested me. It was fascinating to me.

There was someone from Cargill on my accountancy course, and he suggested that I apply for a position with the company. I went through a round of interviews, and Cargill gave me a job. It was not in Geneva as I had expected, but in an animal feed nutrition mill that Cargill had recently bought in Switzerland. It was a family business that had to be integrated – financially, system-wise, and culturally – into a big multinational. It was a fabulous experience. I learned agribusiness there, stocks, shrink, and cash flow – all pragmatic and tangible activities.

After spending two years with the feed mill, I moved to Geneva, where I became the controller for their energy business. Cargill then sent me to Minneapolis to work as a financial controller in their North American energy business. I spent four years there.

After deciding to focus more on its core agribusiness, Cargill sold their energy business to Macquarie Bank. I was involved in the transaction, and headhunters began to call me, offering me various positions. One of those positions was as a financial controller for ADM’s grains business out of Hamburg, Germany. I talked it over with my wife, and we decided to take the offer and move to Germany, where I spent three years.

I then moved back to Switzerland with ADM to be the divisional CFO (Chief Financial Officer) of Global Trade – – ADM’s international distribution and marketing arm.

Just last week, ADM also made me CFO of their International Corn Milling business – starch and sweeteners.

Was it easy for your family to follow you to Minneapolis and Hamburg?

There is a saying that you cry twice when your company transfers you to Minneapolis – once when you arrive and once when you leave. It was initially complicated. My wife worked for Nestlé and had to quit her job when we moved to Minneapolis. Nestlé contacted her after we had been there for a couple of months and offered her a position.

As for my two daughters, they quickly made new friends within the French-speaking community. It is easier to create bonds with people who speak the same language. It was a fantastic time for the whole family – and we visited 28 states in our four years in the US!

Is your wife also in finance?

No, she is head of procurement for Nespresso. ADM doesn’t trade coffee, so there is no conflict of interest.

Could you tell me a little about the role of the CFO in an organisation like ADM?

I see my principal role as the glue between trading, execution, and the other functions within the company. I act as a chief of staff, supporting the BU (Business Unit) presidents in their roles and providing the financial information they need to make the best possible decisions. I work with them to develop and implement the strategy.

I play a coordinating role in liaising with corporate headquarters and the group CFO, making sure that we are in tune with corporate strategy.

I am overall in charge of the contract execution function and have a role in seeking efficiencies and increasing productivity. Trading is a high-volume, low-margin business, so productivity gains are always welcome.

Lastly, I have a fiduciary responsibility to ensure our financial accounts and reporting are timely. ADM is a publicly listed company.

What is the difference between a CFO and a Financial Controller? I see you were both during your career.

The role of a financial controller is to ensure that accounting and reporting align with US GAAP (Generally Accepted Accounting Principles).

In addition to a fiduciary role, financial controllers ensure that internal controls are respected and follow up on internal audits. Financial controllers report to the CFO.

So financial controllers have more of an audit, compliance, and accountancy role than a CFO?

They ensure that the company respects internal and external financial controls and complies with international accounting standards. This is a critical role as the last thing a listed company wants is to restate their historical financials for misstatement or error under the governance of the SEC (US Securities and Exchange Commission)

Besides controlling, another important part of the finance function is FP&A (Financial Planning and Analysis); each BU has a yearly plan, and we have a monthly meeting to ensure everything is on track. Part of my job is forecasting future earnings and capital requirements and updating those forecasts in line with any market changes or events.

I work with the BU president to ensure that the BU’s plans respect the company’s capital limits. I also look at the expected returns of new investments.

Is it fair to say that a financial controller would focus more on the past while a CFO would look more to the future?

I think that is a fair way to put it.

What are the biggest challenges in your role as CFO of a major trade house?

It is probably managing the information flow. We have a fantastic bunch of people here at ADM, and they constantly come up with ideas for new businesses or how to develop our existing businesses.

It can be challenging to separate the great ideas from the good ones – to decide where to allocate our resources and ensure that we have covered all the risks and business implications, such as tax.

It can sometimes be frustrating for team members when their ideas are turned down or shelved for later, but we all understand that we must prioritise the best ideas.

I don’t work on my own. We have a finance team, a controller team, a financial analysis team, and a business development team. Together we ensure we continue to invest and that our existing businesses operate profitably.

How closely do you work with your risk managers?

Very closely.

What are your most significant risks?

Credit and counterparty risk is one – the risk of a client or supplier defaulting on a contract.

When I spoke with Greg Morris for my book The New Merchants of Grain, he mentioned that ADM operates from origin to end destination and that this mitigates much of the counterparty risk. Is that still true?

Operating along the supply chain and sourcing commodities from local ADM companies reduces counterparty risk.

People in the energy markets often trade ten years forward. We don’t deal that far ahead in agriculture, and that reduces our performance risk. We trade this crop year and the next one, so the mark-to-market risk is less than in the energy markets.

What are the other risks?

Operational risk – a boat stuck somewhere that could lead to a vessel arriving late and being out of contract – so default risk.

There is weather risk, for example, a hurricane in the US or a drought in Argentina. We have an advantage because we are a global company with a geographically diverse portfolio. It reduces our market risk compared to local players. If there is a drought in Argentina, we can source soybean meal from Brazil or the US.

There is also a risk of having a rogue trade somewhere. I experienced it earlier in my career, and it’s not nice. One of the worst nightmares for a financial controller is to have “bottom drawer contracts,” transactions that traders don’t put into the system.

I am fortunate to work with great leaders who set the environment – the tone – from the top. They acknowledge that traders can make mistakes and that errors happen. If the trader declares it immediately, they know they will be treated fairly. However, they will be harshly treated if they try and hide it.

Do you have trouble sleeping?

I am cheerful and optimistic, and business problems don’t keep me awake at night. A big part of our job is to deal with these issues and find mitigation strategies and solutions when they pop up.

However, as I mentioned earlier, I do have two teenage daughters. They can sometimes be more challenging than a ship that is running late.

Moving on to the finance function, please explain the difference between transactional or cargo-by-cargo finance and overall finance.

Big companies can issue bonds and syndicate bank loans. We don’t have to worry too much about financing our treasury operations.

Smaller companies are in a less fortunate position and often struggle to obtain the financing they need. Banks will often only finance them on a cargo-by-cargo basis.

In 2019 I interviewed Karel Valken, the head of CTF at Rabobank. He told me that the bank only wanted to finance the big trade houses because the due diligence made it unprofitable to fund the smaller trade houses. How easy is it for small trading companies to obtain commodity trade finance?

Funding can be challenging for smaller companies, but it shouldn’t be a problem if the margins are there. A trading company will get financing if it is making profitable deals.

CFOs in small companies will spend more of their time obtaining financing than allocating it internally. I spend most of my time not raising funds but ensuring we allocate them efficiently.

McKinsey recently wrote that the commodity trading sector would need an extra $300- $500 billion in trade finance. Do you agree, and if so, is it a problem?

The world trade in agricultural commodities will not grind to a halt for lack of finance. I am a great believer in markets. If the margins are there, the finance will be available. The margins will adjust to enable the sector to finance its activities.

Why do banks come in and out of trade finance – do the risks of a blow-up offset the margins on regular business?

Sometimes, a bank might come into commodity trade financing without understanding how trading works and how traders manage the risks. It eventually leads to problems, and the bank will exit the sector. We work closely with our banking partners to ensure they understand our business and we understand theirs.

Do you have to compete internally for funds?

Yes, we compete internally for capital. Most big companies set thresholds below which a BU president can take investment decisions. Above those thresholds, they would have to take the plan to HQ and compete for internal funds.

But before doing that, we must ask, “Is the projected investment a good strategic fit?” For example, we would not invest today in a banana plantation, even if the expected returns were good.

Second, we must evaluate expected returns. We have a weighted-average cost of capital and need to beat that by a certain percentage.

Compared to our processing businesses, we don’t have significant CAPEX requirements in our trading business. The capital we employ is mainly working capital. If we get a decent return on our working capital, we don’t have to worry too much – but we must ensure that we get the returns!

Would rising interest rates affect your plans and strategies?

Absolutely. As the cost of capital increases, so too must our expected returns. However, with the current market volatility, our expected return is robust.

Higher interest rates mean we are getting more requests to extend credit to our clients. Risk management is vital in a more volatile market.

Do you lend money to your clients?

There is sometimes a spread – a margin – between our internal cost of capital and our client’s cost. Some companies may look to capture that margin, but it is not something we do. We are physical commodity traders. We are not a financial institution. I would not use the company’s balance sheet to play the role of a bank. We may offer credit line financing to a client, but only if that client is strategic to our business.

Commodity prices rose dramatically in 2022, and although they have since fallen, some smaller companies must have found it challenging to finance their margin calls on the futures exchanges.

It was challenging for some smaller companies, especially those specialising in origination. They buy the commodities at their origin and then hedge them by selling futures. When prices rise, they must pay variation margins on their short futures positions even though they have offsetting positions in the physicals. Even if a company is hedged, it will still have to pay variation margins on its futures positions. Of course, if futures prices fall, the exchanges credit their account with the money against variation margins.

I didn’t hear companies failing to make margin calls when futures prices rose. It shows that the system works and that the necessary finance is there. Remember that the trading companies were more profitable during this period, and I imagine that this gave the banks more confidence in supplying finance.

At ADM, we had no problem financing our trading during this period.

A financial controller must evaluate the prices of some difficult-to-price commodities. Is that an issue?

No, it’s not an issue. The markets we trade are liquid, and it is relatively easy to value our open contracts. In some cases, we look at the last trade or use external evaluations from brokers.

It was different when I was in energy, where some contracts were less liquid and difficult to mark-to-market – especially for the far-forward positions.

Do you have daily or real-time P&Ls (Profit and Losses)?

I am not a big fan of real-time P&Ls. Traders should focus on the markets and information flow and not on their P&L constantly.

Real-time P&Ls can be helpful in risk management, but I believe daily P&Ls do the job perfectly well.

Also, we are physical traders. Our function is to move products from areas of supply to areas of need to serve our customers, meaning there is a basis component in the price of the products (difference in value between the physicals and the futures). We can get real-time futures prices but can’t get a real-time basis. That reduces the value of a real-time P&L.

You are the CFO of a major trade house – how could your career develop from here?

I have no plan. I enjoy what I do today and get involved in new businesses. I am constantly learning. For example, I am involved in a new distribution business in Pakistan. I am on the board of this new venture. I meet new people, get to know a new culture and country and face new challenges. I told my boss to keep offering me new challenges.

What advice would you give to a) a young trader and b) someone considering getting into the business?

I would tell a young trader to spend time – at least six months – with your finance and operations teams. It will make you a better trader. It will also help you realise that you can have a great career and a lot of fun in a support function. You don’t have to be a trader to enjoy a fantastic career in commodities. Other jobs within a trade house can be just as satisfying as trading.

I would tell a young person thinking of joining the business that they must be passionate about the job. All the people here are driven. They think and breathe commodity trading all day long.

Thank you, Jerome, for your time and input.

© Commodity Conversations® 2023

This conversation is part of my upcoming book, “Commodity Professions – The people behind the trade”, due out at the end of this year.

Ag-Trader News

The UN FAO world price index fell in March for the 12th consecutive month and is now down 20.5 per cent from a record high one year ago. It is the lowest since July 2021.

However, UK grocery inflation has hit a new record high of 17.5 per cent. Sky News blames rising sugar prices, while the FT blames fruit and vegetables.

 The War in Ukraine

Poland and Ukraine have agreed to temporarily stop all Ukrainian grain imports into Poland, although the restrictions do not extend to the transit of grain. Polish Agriculture Minister had resigned earlier in the week over the issue.

Thousands of farmers protested across Romania over the impact of Ukrainian grain imports, blocking traffic and border checkpoints with tractors and trucks.

Ukraine’s first deputy farm minister said his country might export a further 15.6 million mt of grain in the April to June quarter, which would lift this season’s exports to nearly 53 million mt.

However, Russia’s Foreign Minister has warned that Russia may pull out of the Ukrainian grain export deal if the West fails to remove obstacles to Russian agricultural exports. He said a lack of access to insurance and the SWIFT financial messaging system curtails exports.

Cargill, Viterra, and LDC will exit the Russian domestic grain export markets and stop elevating activities (buying grain from farmers, moving it to the ports and loading it onto vessels.) They will still trade Russian grain, but only on a FOB of C&F basis. (Click here for LDC’s press release.)

ADM is reevaluating its activities in Russia, particularly its joint-venture corn sweetener operations with partner Aston. Bloomberg’s Javier Blas has an excellent take on the news.

CME asks whether the war has broken the link between energy and ag prices.

Other market news

 El Niño is forecast to return in 2023. Here’s what it might mean for extreme weather and global warming.

There were reports that India could see a one million mt drop in wheat production this season due to unseasonal rains and hailstorms in pockets of Punjab, Haryana, and Rajasthan, resulting in losses ranging from around 25-50 per cent.

However, the country’s Food Secretary said the government does not expect any shortfall in wheat production. He added that the country would “probably end up with the same figure of 112 million mt of production or in the worst-case scenario, there will be a negligible drop.”

Even so, India’s government said the wheat export ban would continue if the country feels uncomfortable with domestic supplies. Meanwhile, the government may relax norms to procure wheat from farmers for domestic reserves.

The Business Recorder is worried about global wheat security, writing that per capita availability has declined from 111 kg per person in 1990 to under 100 kg per person in 2020. Meanwhile, The Economist is worried about rice yields, writing that they have increased by less than one per cent yearly over the past decade.

Argentina, expected to harvest around 25 million mt of soybeans this season, may have to import up to 10 million mt, more than double previous years, mainly from Paraguay and Brazil. Luckily, Brazil is harvesting a record crop.

Agricensus has a long read on the changing dynamics in world soybean flows.

Some US farmers are switching to non-GM corn to meet Mexico’s ban on GM corn.

Brazil’s Agriculture Minister has asked COFCO for further investment in Brazilian railways and waterways and financing farmland restoration.

Egypt has raised domestic food subsidies spending by 20 per cent in its FY 2023/24 draft budget.

Tunisia’s agriculture ministry has banned water use for irrigation because of a disastrous drought.

Nutrien’s CEO has warned that global fertiliser supplies will stay tight in 2023.

Shell has abandoned plans to make biofuels in Singapore, particularly SAF (Sustainable Aviation Fuels).


A group of US congressmen have introduced a bill to scrap the exemption for ocean shipping companies from federal antitrust laws.

Danish owner J Lauritzen has signed a letter of intent to build at least two methanol dual-fuelled bulk carriers in Japan, backed by long-term time charters to Cargill.

The global operations director for Cargill Ocean Transportation in Geneva has given an excellent interview.

Livestock farming

Climate change could significantly shrink profit margins for the world’s meat and dairy farmers, according to an estimate by a large investor group known as FAIRR.

Farmers protesting against the Dutch government’s plans to reduce livestock numbers have formed a political party.

The Washington Post asks whether carbon-neutral beef is a pipe dream.

Environmentalists are objecting to an A-minus sustainability grade that the Climate Change Report has given to JBS, a Brazilian meat company previously linked to deforestation.

Italy’s government has approved a bill banning laboratory-produced meat to protect the country’s livestock farmers.

An Australian company has made a meatball from lab-grown cultured meat using the genetic sequence of the long-extinct mammoth. Meanwhile, a Belgian startup has added woolly mammoth protein to a plant-based burger. (Will Pterosaur Nuggets be next?)


Deforestation associated with oil palm cultivation has declined in recent years in Indonesia. Still, the forest is being cleared at a record pace in a biodiversity haven at the northern tip of Sumatra.

Bloomberg has an interesting short video on how the sector is working to make palm oil more sustainable.

The Bureau of Investigative Journalism has found that migrants on the UK’s farmworker visa scheme face systematic bullying, abuse and growing debt.

Reuters has a long read on the failed attempts to raise income for West Africa’s cocoa farmers.


ADM and Brightseed have partnered to decipher the molecular interactions between dietary plants and gut microbes and their potential impact on human health.

Researchers at the University of Bonn have discovered gene variants in wheat and barley that improve nitrogen utilisation.

Bloomberg has an article on how Bunge is helping food processing companies to innovate.

Lastly, we have known for a while that plants communicate with one another, but a new study identified words and found that different species speak different languages.

© Commodity Conversations ® 2023

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Ag-Trader news

Ukraine war

Traders were caught a little off balance last week by a report that Russia could temporarily halt wheat and sunflower exports after a sharp drop in global prices.

Reuters quoted a source as saying that the government has asked exporters to set a wheat export price of not lower than $275 per tonne “until further notice”.

Traders were already confused about the Black Sea grain corridor extension. Ukraine says it has been extended for 120 days, while Russia says it is only for 60 days.

Russia has laid out their conditions for agreeing to any further extension, including restoring access to the SWIFT system for state-owned agriculture-focused bank Rosselkhozbank, resumption of farm machinery supplies, and unblocking foreign assets and accounts held by Russian agricultural companies.

The FT has an excellent long read on how Russia’s invasion has destroyed significant parts of Ukraine’s grain export infrastructure.

Ukraine’s farmers are planting less acreage than last year. The International Grains Council forecasts Ukraine’s grain output at 47 million mt, about half its pre-war level. The government has warned that the 2023 combined grain and oilseed harvest could fall to 63 million mt, down from 70 million mt harvested in 2022. The good news is that the winter grain crops are in a good-excellent state.

The European Commission has proposed allocating €56 million from the EU budget to help Poland, Bulgaria, and Romania cope with increased imports of cereals and oilseeds coming from neighbouring Ukraine. Ukraine’s exports have particularly hurt Romania’s farmers.

Other market news

The La Niña weather phenomenon has officially ended, but there is a 50 per cent possibility that an El Niño event could form later this year.

The UK’s annual food price inflation hit 18 per cent in February, the highest level since the 1970s, pushing the Consumer Prices Index up by 10.4 per cent compared to a year earlier. The price of Bloomberg’s basket of English breakfast items soared past £35, an increase of more than 22 per cent from a year earlier.

A Brexit-induced farm labour shortage is partly to blame for the rise.

The Indonesian government has approved a variety of GM wheat for human consumption designed to resist drought better. In a long read, World-Grain asks whether GM wheat has a future in the US.


The UK government plans to eliminate import tariffs on palm oil from Malaysia, the price of joining the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).

Bloomberg fears that a global biofuel boom could lead to a shortage of vegetable oils.

Chevron has announced a collaboration with Corteva and Bunge to produce renewable diesel from canola. The joint venture will plant as many as 10 million additional acres of canola in the southern US.

Big companies are abandoning research into producing biodiesel from algae, but the BBC wonders whether kelp has a future in sustainable aviation fuel.

Company News

Bunge has made it into the S&P 500, replacing the ill-fated Signature Bank.

Louis Dreyfus Company (LDC) reported a 44 per cent jump in 2022 net profits to just over $1 billion from $697 million in 2021.  Net sales rose almost 21 per cent to $59.9 billion from $49.6 billion.

Viterra posted a record EBITDA of $2.65 billion for the 2022 calendar year, a 21 per cent increase from the previous year. Revenue increased 35 per cent to $54 billion.

Container shipping companies have been in the spotlight, paying billions of dollars in dividends following last year’s record profits.

Animal Farm

China has agreed to resume imports of Brazilian beef and approved four new beef packers. Brazil voluntarily halted exports to China on 23rd February after discovering an atypical case of mad cow disease.

Meanwhile, a surge in African swine fever infections in China could reduce domestic pork production.

Switzerland has reported a case of mad cow disease – bovine spongiform encephalopathy (BSE) – in the eastern region of Grisons. The relevant authorities classified the case as atypical.

Avian influenza’s spread through Europe’s poultry flocks has eased, but authorities are concerned that cases may rebound as wild birds migrate in spring.

The Environment

The latest IPCC climate report paints a stark picture of the world’s food systems, but solutions exist.

Are we facing phosphogeddon? Some scientists warn that the misuse of phosphorus could lead to a shortage of fertilisers. However, the problem may be solving itself. We may already have reached peak fertiliser. Microbes and regenerative agriculture might accelerate the move away from fertiliser.

Paraquat, banned in more than 50 countries, including the EU, China, and Brazil, is still one of the most popular herbicides in the US. It will go on trial in October, accused by more than 3,000 farmers of contributing to their Parkinson’s disease.

European lawmakers have finally agreed on a timeline for the EU’s plan to cut pesticide use, which leaves a final deal on the file unlikely in 2023.

In a long read, the FT argues that rich nations are not looking good in the debate over palm oil. They are also behind on their plan to plough $1 billion into soybean and cattle farming free of deforestation in threatened South American ecosystems by 2025.

PepsiCo’s chief sustainability officer has warned that half of the world’s population will face water scarcity as soon as 2025.

A study published in Nature shows that cradle-to-grave emissions from food loss and waste represent half of total greenhouse gas emissions from food systems. If correct, it might mean that the best – and easiest – way you can help the environment is to stop throwing food away.

The FT has a different take. It writes that selling your SUV is the best way to help the environment is to sell your SUV.

Nutrition and Health

Nestlé says less than half of its mainstream food and drinks are considered healthy.

It is ironic – and perhaps inevitable – that Novo Nordisk, the maker of the weight-loss drug, Wegovy, is now worth more than Nestlé SA, the world’s biggest food company.

But why do we like unhealthy and fattening foods so much? A new study published in Neuroscience News attempts to answer that question, while the New Scientist explains why people regain weight after dieting.

© Commodity Conversations® 2023

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Diversity Champion: Sheryl Wallace, President, North America Grain, at Cargill


Since 2015, McKinsey and Company has investigated the business case for diversity, and its most recent findings, published in its report Diversity Wins, have reaffirmed that the relationship between diversity on executive teams and the likelihood of financial outperformance has strengthened over time.

However, the report found that significant, sustainable progress remains a challenge for some companies, with organisations initiating fragmented diversity and inclusion initiatives and lacking a clear link with the company’s core business strategy.

Sheryl Wallace, President, North America Grain, at Cargill, speaks to HC Insider about Cargill’s commitment to increasing the diversity of its workforce, creating an inclusive environment, and removing barriers to ensure equitable access. We also explore Wallace’s career in agriculture, how she is building inclusive teams to unleash the power of diversity, and her advice for others climbing the corporate ladder.

HC Insider: Please tell us about your career leading up to your current role at Cargill.

Sheryl Wallace: I am grateful for the incredible 26-year career I’ve had at Cargill. My first assignment was in Iowa Falls, IA where I was a soybean meal merchant in Oilseed Processing. I was immersed in the heartland, learning the business and fell in love with agriculture. The next two decades took me on a journey through different businesses and roles such as edible oils, flour milling, financial services, and energy while serving in commercial, trading and merchandising, sales and marketing, and risk management positions. Before moving into my current role, I led Cargill’s Corporate Risk Management Group that has fiduciary oversight for trading, credit, and balance sheet risks.

HC Insider: What does your current role involve?

SW: I currently have the privilege of leading our North America grain business. Cargill was founded from a single grain elevator back in 1865, making this a very special place. I am so proud of our team who shows up every day to deliver on our purpose of nourishing the world and doing so in a safe, responsible, and sustainable way. At the heart of what we do, and what I love about our business, is the fact that we sit in the center of the supply chain with thousands of people helping farmers to be successful and connecting them to domestic markets and global supply chains. Our grain network has over 100 elevators, export terminals, and a large barge fleet, therefore operations, supply chain and logistics are also critical to our business. You’ll find me equally comfortable in the office or wearing my boots and hardhat at a facility. I also serve on the National Grain and Feed Association Executive Committee & Board and Ardent Mills’ Board of Directors.

A lot of people see mentoring as a one-way relationship but for me, it’s about having the opportunity to meet new people, gain perspective and learn from mentees.

HC Insider: What are you passionate about and how has that fuelled your success?

SW: I am passionate about our people and helping them reach their potential. During my career, I benefited from mentors and having a strong network, so giving back to others is important and fuels my passion. A lot of people see mentoring as a one-way relationship but for me, it’s about having the opportunity to meet new people, gain perspective and learn from mentees. In addition to mentoring and cultivating networks for others, I’m passionate about leading teams to accomplish more than they think is possible. I’m proud of working at Cargill where we recently refreshed our strategic direction and at its core, is all about investing deeply in our people. Family is especially important to me, too. We have four children ranging from 15 to 29 so when I’m not at work, you’ll often find me at a soccer field or basketball court cheering on my son or daughter and their team.

HC Insider: What does your role as Executive Sponsor of Cargill’s Global Women’s Network (CWN) involve?

SW: I serve as the senior leader advisor to our global women’s network. I have the honor of being a sounding board, resource, and a thought leader asking critical questions. We have a talented group of women and men leading our global women’s network. So, mostly, I just stay out of their way. Between our CWN business resource group and our Diversity, Equity and Inclusion (DEI) team, there is passion and commitment towards achieving gender parity. This commitment is prevalent in our C-Suite. A milestone in Cargill’s DEI journey of achieving gender parity, is that our Executive Team is now made up of 50% women.

HC Insider: Was there a point in your career or personal life where you started thinking more about diversity?

SW: When I started my career in the mid-90s, the company, and society in general, was very different from where we are today. Back then, diversity wasn’t talked about, if anything there was emphasis on “fitting in” and conforming in the work environment in order to be successful. Differences weren’t celebrated. When I became a trader in our Minneapolis office, there were probably 50 to 60 people on our trade floor, almost all men. I remember my first day being pulled aside by one of the assistants who said she was excited to see a female on the trade floor. She went on to say I “should get myself a nice navy or black suit to look like the guys”. I had not thought about that moment until years later when I went through unconscious bias training and reflected on the different experiences I had. But more importantly, I learned about the biases that I carry and gained tools to navigate them in ways that supported my DEI values. It was also a turning point for me to appreciate that I grew up in a family who believed in me and encouraged me to do or be anything I wanted. I learned this was not the same for others and how powerful it is when you remove visible and invisible barriers. I saw colleagues become more innovative, engaged in their work, and contributing in meaningful ways. This sparked a passion and compelled me to be a champion of inclusion and diversity. At Cargill, we’re focused on culture, values, behaviors, and expectations – we’ve made significant progress towards our commitment on diversity of gender and unrepresented minorities.

Working in agriculture is not for the faint-hearted. We are affected by macro-environment factors, geopolitical events like Russia’s invasion of Ukraine, the trade war between the US and China, supply chain issues, and of course Mother Nature. While there are challenges, we have incredible opportunities to make an impact.

HC Insider: What are some of your career highlights?

SW: I have so many career highlights, where do I begin? I have been fortunate; having a career where I’ve met incredible people, had opportunities to learn, grow and contribute in meaningful ways, and have a fulfilling work and personal life. One highlight is that our family moved to Geneva, Switzerland in 2009 where I led one of our financial services businesses overseeing Europe, Middle East/Africa, and Asia Pacific. We were grateful for the family time while living abroad. To this day, my daughter jokes with me on how much I relied on her to speak French and navigate grocery stores or the doctor’s office. She was only five years old, but her French was much better than mine! The business accomplishment was more than doubling profitability. Another career highlight came in 2016 where I was asked to transform our Corporate Risk Management Group, creating the vision and strategic direction, then activating it by harmonizing disparate processes, modernizing our risk metrics, and deploying a global risk management reporting system. I am proud of that team and what was accomplished in a short period. Traveling with our team, meeting customers, and touring our facilities is always a highlight. As I reflect, there are so many great memories that bring a smile to my face and deep appreciation to these special experiences. For example, I’ve visited schools in Vietnam built by Cargill, walked soybean fields in Brazil with our team to assess crops, tasted coffee at roasting facilities in Guatemala with customers, toured beef slaughterhouses, visited one of the most modern flour mills in the US, and rode a tugboat on the Mississippi River hauling barges filled with our grain.

HC Insider: What were some of the challenges you faced and how did you overcome them?

SW: Working in agriculture is not for the faint-hearted. We are affected by macro-environment factors, geopolitical events like the trade war between the US and China or the Russian invasion of Ukraine, and of course the global Covid-19 pandemic. We are experiencing ongoing supply chain disruptions and extreme weather events. The list goes on and there will always be challenges. To deal with them, I’ve had to adjust my mindset by focusing on three things. The first is focusing on what’s in your control. We can’t control everything, but we can control how we respond, the contingencies we have in place and how we show up for our customers and teams. This is where being guided by values matter. The second is staying optimistic and asking yourself, ‘how can I turn this challenge into an opportunity?’ This doesn’t mean being dismissive about the challenge. It’s important to lean into the reality of what you are facing. I believe that you need to be authentic yet optimistic when helping your teams navigate change or challenges. The third pillar for me is focusing on your team’s well-being. We’ve learned the importance of this through the pandemic. People may not remember what you did for them, but they will remember how you made them feel.

We need to encourage companies to not think about DEI as a separate initiative. When it’s embedded into your culture, your values, in your leadership principles, and the management systems, then it really starts to take off.

HC Insider: How has Cargill created equity in the workplace?

SW: I am proud of the actions Cargill is taking to create equity. We offer several programs providing equitable access to opportunities and resources to be successful. Another area of focus is our commitment to our frontline workers. We want to ensure all of our facilities are inclusive, safe, accessible, and convenient for all employees. We also have uniforms that offer different fit, so everyone feels part of the team and is comfortable in their daily attire. You can’t be your best when you don’t feel your best. When it comes to hiring talent, we expect diverse interview panels, so that we hear different perspectives on assessing talent. When applying for jobs, we know that women and underrepresented minorities take a job description more literally and question if they have every skill. Sometimes they won’t throw their name into the hat because of this. This is why we’re also challenging ourselves on the actual requirements needed for a job versus what is just preferred. Another example is that we’ve sent hundreds, if not thousands of people through unconscious bias training. To achieve our purpose, we need a culture that is inclusive, where employees feel welcomed, valued, and heard, and where employees have equitable access to resources to be their best. I love the theme for this year’s International Women’s Day, #EmbraceEquity.

HC Insider: How have you helped to develop and encourage talent? 

SW: I have a passion for developing people and leading teams — being an ally to colleagues too. It’s important to respect everyone and their ideas, and also be more assertive when recognizing bias. I try to provide an inclusive workplace where people can share their voice and form allyships. Being an ally can look different from person to person. I was in a meeting where a woman had come in late, and she pulled up a chair but was sitting outside of the circle around the table. All it took for her to feel included was one person moving back and making space for her. Simple actions can go a long way. Everyone can be a DEI advocate. I think it’s also important to have connections with people that can give you honest, candid feedback. I appreciate the courageous conversations – this is how we learn and grow.

HC Insider: How can DEI be a priority for organizations?

SW: When diversity, equity and inclusion are lived out in your organization, you can deliver on your purpose. When you create a sense of belonging in your workplace, employees will be more engaged. When DEI is a priority, you are better positioned to serve customers, solve complex challenges, and attract and retain the best talent and outperform others.  We should encourage companies to not think about DEI as a separate initiative. It should be embedded into your culture, your values, in your leadership principles, and the management systems, then it really starts to take off. That’s how you create a sustainable culture around fostering inclusion, providing equity, and ultimately becoming more diverse. And, I do believe that the commitment from senior leaders is critical. The tone needs to be set from the top that DEI is a priority and to have measurable goals.

Sheryl’s top tips for career success:

I use the acronym D.A.R.E. and shared it recently with a mentor who felt stuck.

D stands for Dream. This is about dreaming big, believing in yourself, and setting your sights high.

A stands for Authentic, and at the heart of this is bringing your best self to work.

This leads to the R, which stands for Results. Being result-oriented is important so you don’t lose sight of what you’re trying to achieve – outcomes matter.

And then the last letter, E, stands for Empower. There are two sides to this – being empowered and owning your career and also empowering others by paying it forward.

In the end, I want people to have the courage to DARE, to be their best self and reach their full potential because it’s so worth it!

To speak to HC Global’s Agriculture and Nutrition team, please contact:

Alex Coghlan, Director for the Agriculture and Nutrition practice

Heather Falgout, Senior Associate, Agriculture and Nutrition practice


A conversation with Alex Coghlan – HC Group

Good morning, Alex. Could you please tell me a little about you and HC Group?

Hi Jonathan. I joined HC Group in 2012 in our London office before moving to America to help grow our global agribusiness practice. The practice is focused on leadership assignments across agriculture, animal nutrition and health and food ingredients.

We help companies that feed the world. Playing a small role in that mission keeps me passionate and excited about the industry’s future.

HC Group was established in 2003. We identify business-critical talent for organizations across the global energy, metals and agricultural value chains. We also provide data-informed talent advisory around organizational structure, strategy, and compensation.

How important are ags for HC Group?

HC Group works across the commodities value chain. Ags is one of the three pillars of our business, alongside energy and metals.

Today, the war for biofuel talent has never been fiercer. As energy companies seek to decarbonize their platforms, the demand for vegetable oil procurement, analytics, and trading professionals outweighs the supply. This talent pool is highly specialized and relatively sparse. It is now being recruited by both the agriculture and energy industries, leading to an unprecedented level of competition between these two sectors.

Given the strength of our network in the energy and agriculture market, we have a unique position in the industry. It has helped our contacts and clients pivot from the agriculture to the energy industry.

What are the challenges in getting people to move from ags to energy?

I would say location is often the challenge. In the US this talent pool is primarily located in the US Midwest. People are often reluctant to relocate away from the Midwest to traditional energy trading hubs in the US Southeast or East Coast. Energy companies with flexibility around location will be the best positioned to secure the talent.

How is the ag-employment market now? What sectors are hot – what types of companies are recruiting?

 During 2022, US energy trading firms, refiners, and producers were hiring commercial heads for their biofuel platforms. We worked with them to identify individuals capable of creating the strategy to build the business. It is not as easy as it sounds; it can be challenging to source the necessary feedstocks. These individuals often must educate the energy majors about the ags markets. Oil traders might ask, “What do you mean you’ve lost the crop – where has it gone!” You must explain that growing crops is different from drilling for oil!

This year, in the US, these firms are building their teams and hiring contributor personnel, such as biofuel feedstock procurement specialists – the rung below the commercial head. The demand for biofuel expertise has cooled off relative to traditional vegetable oil feedstocks, with the focus now on advanced feedstocks experience with products such as UCO and tallow.

In the past year, the energy-trading houses have been looking to diversify their revenue schemes by going into ags. The energy trading companies have been relatively agnostic as to the agri-product line.

Energy trading houses such as Gunvor, Hartree Partners and Vitol hired new agricultural trading talent to their platform. Existing hedge funds such as Citadel and Millennium expanded their teams, while more recent entrants such as LMR Partners, Qube and Squarepoint have entered the market.

The significant hedge funds are also looking to diversify into commodities, agriculture included. Millennium is an example. The company recently hired Todd Thul, ex-head of Cargill’s corn desk.

In previous commodity bull markets, hedge funds have hired successful traders only for the traders to crash and burn. How can a hedge fund ensure that a physical trader will be profitable independent of the physical flows and assets and without access to information and analysis?

It is the million-dollar question!

While past performance does not guarantee future returns, it’s arguably the most valuable measurable when hiring talent. The number of individuals the hedge funds are genuinely courting remains relatively small, given how challenging it is to consistently return steady P&L numbers, year in and year out, without having an asset infrastructure behind you.

The hedge funds have more interest in talent that has already left a trading house and proved themselves in an asset-light environment without the information flow and support system to help them make trading decisions. Industry reputation and referencing talent within their peer group is one way we look to understand past performance, which in turn gives a good idea of the top percentile of successful prop traders.

I hear that the market for traders is so hot that hiring firms offer multi-million dollar signing fees. Is that true?

Yes. While some rumours are hearsay from traders, and numbers get inflated, some individuals are receiving million-dollar signing-up fees to move. But that’s also the compensation for the opportunity cost of leaving a safer environment in an ABCD. It’s a risk-reward decision. There is a high demand for agri-prop talent, and traders will look to capitalize on their market worth.

I sometimes wonder why a high-performing leader would leave a trading leadership role to move to a hedge fund. Typically, the number two and number three trader on the desk will make that move. (1)

What advice would you give to a traditional trading house in this environment – how can they keep their teams together?

 Trading companies must expect a certain level of attrition as they cannot compete with hedge funds and energy trading houses in terms of potential bonus upside. If individuals leave the business purely for compensation, that’s not something I would spend time worrying about.

High-performing organizations require people strategies. Engagement, retention, and growth are all intertwined and should be essential business strategies. Ultimately, engagement is about employee discretionary effort; they can give or withhold it at any time. Leaders need to know their employees well and react to their needs.

Communication is vital in any organization, and it is what underpins everything. To retain talent, focus on skillset development and leadership development. Better leaders create better teams, which creates higher retention. Focus on employee development. It’s a manager’s responsibility to grow your team’s skillsets and help them achieve their goals individually and as a whole.

If you are a big trade house, you must ask yourself why other people who are not necessarily or exclusively motivated by money are leaving. Maybe you don’t have clear succession plans in place.

The line manager should not underestimate the importance of one-to-one meetings to engage and retain employees. They give line managers a clear line of sight about what the employee needs to do and where they are going. They enable the line manager to have individual time with the employee, understand if they are OK, and detect any early signs of any changes that need to happen. Do they know their future career path and the succession plan for their leaders?

Succession planning is a serious issue for the industry. The ag industry is cyclical, and you see that in hiring and firing. Four or five years ago, the ag sector was depressing – the margins weren’t there, and companies were laying off traders. The problem was that they let go of the mid-career traders – the 25- to 35-year-olds. The trading houses have gaps in their succession plans. In addition, structures flattened during the lean years, and people don’t now have the rungs to move up the ladder.

Ask yourself how you engage with your traders on their career plans. How often do you sit down with them and map out their future? What are their pain points – their frustrations? The talent pool is in tight supply at C Suite succession planning and for mid-level bench strength. There is a missing generation of 40-55-year-olds, and everyone is struggling to fund succession planning solutions. The reality is young talent earlier will be pushed up faster into leadership roles than ever before. (2)

Looking at the other side of the coin, what advice would you give someone approached by a hedge fund employer?

 First, you must ask yourself where you want to be long term. Some people like to stay in an individual contributor role – to stay as a trader on a desk, and some want to move into leadership positions. These are two different paths. If the latter, you should probably stay.

Second, you should do your due diligence on the platform you are joining. You must understand their mindset and their expectations – are their expectations realistic? You know the returns you can achieve – would the new platform be comfortable with those returns? You must also evaluate their risk appetite. Traders must take risks to make money, but some employers may not be comfortable with those risks.

Third, you must also ask yourself to what extent the new platform understands commodity markets – particularly the ag markets. It may be riskier if you join an equity hedge fund with no experience in commodities.

Fourth, you must ask to what extent the new platform is investing in building its commodity trading capacity. For example, Citadel has built a first-class commodity research team that will help traders analyze their markets, but it also shows that they are investing in the sector long term.

Fifth, you must balance the risk and reward because a fund will pay you more than a trade house when you get the market right but will fire you quicker when you get it wrong. And traders always get markets wrong at some stage in their careers.

Last, you must ask yourself, what if they fire me within two years? Have I burnt my bridges? Is the risk worth it?

Hedge funds are fantastic places to make money as a trader if you are successful, but it is a challenging environment if you have a bad run. An equities hedge fund may not understand the commodity business. I would feel more comfortable recommending someone to join an energy trading house that understands physical flows and how the commodity markets work. There are tremendous opportunities, but you must be selective.

Commodities have a reputation for being male-dominated and macho. To what extent is that reputation warranted?

 That is a fair assessment, but it is starting to change. It’s changing at the junior level as organizations now hire different profiles out of college. The biggest challenge lies in middle and senior leadership because all the companies have the same profile. We recently ran a position for a senior economic analyst for the global ags landscape, and only eight per cent of the candidates were female.

HC Group has launched a Diversity Champions series for its content hub, HC Insider. The series will feature senior-level talent representing various backgrounds and experiences to promote and drive inclusion in the commodity markets. Most recently, we interviewed Jaime Goehner, Commercial Manager at ADM, about her career journey, what has been critical to her success, and how she is helping to develop talent.

If you would like to be interviewed in the Diversity Champions series, please contact Heather Falgout to discuss.

Suppose your best friend’s daughter wanted to get into commodities – would you advise her to go into energy, metals or ags? Do the different sectors require different profiles?

The skillsets you acquire are transferable between the three sectors, but I recommend agriculture. I love the industry and its people, so that is probably a biased answer!

And education levels – Bachelor, Masters, MBA, PhD? When I began in the business, the big companies liked to recruit people after a BA degree and train them themselves. Is that still the case?

 Yes, graduate development programmes are a must. However, companies need to be aware of changing desires of the next generation, particularly around energy transition and sustainability. Companies need to engage in how they are part of the solution.

That said, and why HC Group exists, companies always need external talent to take on new markets and regions. The same applies to building a vision for these individuals, given the increased opportunities out there. That messaging is critical and a significant part of our work for client partners.

Do you see a change in capabilities required to be a successful trader?

Much remains the same. Curiosity, commerciality, and relationship building, but added to the mix now is the need to be technologically savvy. Digitization and the velocity of the market mean traders need to understand risk management much more and be literate when it comes to developments in analytics and modelling. We recommend everyone tries to get a basic understanding of coding and statistics.

How do you imagine AI will change future trading desks?

 The most significant advancements are taking place in the pre-trade space for AI. Companies are increasingly looking at more advanced ways to analyze and interpret the vast quantities of structured and unstructured data aggregators provide.

 What advice would you give young people thinking of getting into the sector?

First, invest in yourself. Your only competitive advantage is your ability to learn faster than your competition. What are you doing to support your career? Investing in yourself is the best investment you can make.

Second, build relationships within the industry. The people we hire are typically the ones recommended to us by their peers, their managers from years ago, or their competitors with whom they trade. Build networks.

Thank you, Alex, for your time and input.

(1) I may be able to add a little to that. Many successful traders don’t know if they are only successful because they work for an ABCD+ company. You sometimes see top traders moving from the big trade houses to test themselves – to find their true worth.

You also have top traders who feel too restricted by their VAR limits. Their companies may have stopped them from a position, only for the market to turn and move in their favour. Fausto Felice – the ex-head of Cargill’s wheat desk – mentioned this when I interviewed him for my book Commodity Crops – And The Merchants Who Trade Them.

(2) In The New Merchants of Grain, I asked CJ Van den Akker, then head of Cargill’s trading activities, how he felt about people leaving. He replied:

I have mixed feelings about that. In one sense, it bothers me. Through our training, we’re feeding our competitors with talent. But at the same time, I’m proud that we recruit and train people so well. That tells you a lot about this company and how we invest in our people. I think that’s a good thing.

But frankly, there is no choice at the end of the day. We’re a pyramidal structure. People are promoted on merit and will fall out of that system. Our objective is to maintain our strongest talent. We don’t always succeed. But not everyone can reach the top, so people will always seek other opportunities. I think that’s OK. It’s the way the system works; it’s inevitable.

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