A Conversation with Alex Eito
Good morning, Alex, and welcome to Commodity Conversations. Please briefly describe your career so far and your current role.
I began my career at Cargill, a highly structured and demanding environment for learning the commodity business. From there, I moved through a few other trading firms, then into the financial sector just before the 2008 crisis and later established a hedge fund with some former Cargill colleagues. The hedge fund performed well operationally, but a major investor withdrew, so we returned all the money and closed it cleanly.
All those experiences have given me exposure to nearly the entire value chain: very large houses, mid-sized traders, and the financial aspects of commodities. I am naturally a generalist, so I’ve always preferred knowing a bit of everything rather than specialising intensely in a narrow niche. In this industry, curiosity is crucial.
Today, I work for Arasco in Riyadh, Saudi Arabia, as a Senior Vice President. I’m responsible for trading, shipping, procurement, pricing, and all aspects of buying, importing, distributing, and reselling raw materials domestically and regionally. We also co‑own five vessels in partnership with Bahri, the Saudi shipping company, so shipping is a significant part of my remit as well.
What does Arasco do in practical terms?
The core of Arasco’s business is animal feed, with corn milling as a secondary major activity. We have a port with approximately 450,000 tonnes of storage capacity, rail connections, and three plants: two feed mills and one corn mill. Arasco is also a major shareholder in a poultry business.
We also operate a vessel agency and an inspection company, import inputs, and utilise our assets and logistics network to redistribute commodities within Saudi Arabia. These include corn, soybean meal, sunflower meal, wheat bran, alfalfa, and other feed-related products. We are not involved in flour milling or oilseed crushing, so we concentrate on the feed sector rather than food staples like bread.
How is your trader’s experience assisting you in managing the current situation in the Middle East with your factories, mills, and distribution chains?
It helps me in two ways: international logistics and domestic distribution. Internationally, you must understand when to divert a vessel, how to renegotiate terms, what your insurance covers, and which routes involve certain risks. For example, choosing between time charters and voyage charters is partly an energy gamble: if you commit to a long voyage charter at the wrong time, you’re effectively taking a position in crude oil and bunkers. Occasionally, in volatile environments, time charters are safer because they minimise bunker exposure.
Domestically, trucking operates similarly to ocean freight. If security measures or congestion cause trucks to travel three or four times the usual distance, and loading or unloading is slower, your effective “local freight” cost per tonne increases because each truck makes fewer trips. Considering freight as “dollars per ton‑mile” or “per day’—rather than just a fixed number—helps you convert your shipping intuition into domestic logistics decisions. Originating and distributing are mirror images of the same challenge.
Are you noticing unexpected distortions in futures markets and spreads due to the Iran conflict?
The biggest distortions today are in the oilseed and vegetable oil complex, partly linked to the broader energy and biofuels story. A large share of vegetable oil production now goes into biodiesel, and higher crude oil prices create a kind of “war premium” across that complex. It’s hard to quantify precisely, but you can feel the froth when oil rallies and pulls vegetable oils and even corn (through ethanol) along with it.
We’ve also observed periods when the relative value of soybean oil compared to soymeal shifted so dramatically that the meal effectively became the byproduct rather than the primary product. This alters how crushers operate and how you consider margins. Some of this is driven by war and regional tensions, some by biofuel mandates, and some by broader energy market dynamics.
The conflict is pushing up fertiliser and other input costs. Could this lead to higher food prices and lower yields in the longer term?
The main factor is planting decisions and input application. Higher fertiliser prices may prompt farmers to reduce application rates or shift land away from fertiliser‑dependent crops like corn and, in some cases, wheat. That’s a double blow: higher per-unit costs and possible lower yields.
From what I hear, many US farmers are well covered with fertiliser for the current season, but there could be effects in Brazil and other regions where coverage is less complete. Lower application this year may reduce yields and influence what gets planted next year in South America. Will that justify a significant price move today? Probably not on its own, but over the medium term – six to eighteen months – it can tighten balances and support prices. In this environment, I would be cautious about taking large, long‑dated positions purely on this factor, whether long or short.
Should the Middle East be worried about possible food shortages?
It’s difficult to speak for the whole region because stocks and logistics differ greatly between countries, and I don’t have a detailed view of every stock level. What I can say is that, so far, I haven’t seen widespread, systemic shortages—more local shortages and logistical issues rather than factories having to shut down due to a lack of raw materials.
If the conflict endures and disrupts flows over a long period, you can certainly find yourself in a tighter situation. However, an important factor in this region is a degree of practical solidarity: companies and even competitors have been working together to keep supply chains functioning within economic limits. Prices and logistics costs have risen, yes, but there has also been a deliberate effort not to “kill” each other in a crisis. That matters.
Has the crisis elevated your importance within the organisation?
Regarding pricing and risk management, my background is very useful for analysing markets and developing balanced hedging strategies. However, it is a team effort in logistics, operations, and contingency planning. We have established a robust cross‑functional team to manage routing, freight, trucking, and plant supply.
The lesson from the Ukraine war is to be careful not to overreact in one direction. Many people were left wrong and with losses after initial price spikes because they extended too far on the assumption that tightness would last indefinitely. In crises, the challenge is to stay balanced: protect against real disruptions without betting everything on a single geopolitical scenario.
Going back to your career, you’ve traded many agricultural commodities. Which one do you prefer, and why?
Each commodity has its own character. Grains, oilseeds, sugar, coffee, cocoa – they all trade differently. Sugar used to be a “clubbier” business: smaller, with closer relationships and a very specific feature – it’s deliverable worldwide on a FOB basis, which fundamentally influences how you manage logistics, spreads, and risk.
Grains like corn and wheat are more about basis and premiums compared to Chicago. They generally require more physical assets, starting from farms, and the trade is more dispersed. Wheat is closer to a flat-price market, but with significant political and geopolitical factors, especially since Russia shifted from being a major wheat importer in the 1980s to the leading exporter today.
Personally, I’ve always liked grains and oilseeds, and to some extent, sugar. Coffee and cocoa are smaller, more granular markets in which destination stocks often influence dynamics. If your interest is in flat-price futures, grains may suit you better. If you prefer spread trading and delivery mechanics, sugar is fascinating.
Which commodities have been the most challenging?
Wheat can be complex because of its political and geopolitical context. Policy decisions can change suddenly. Sugar presents a different challenge: it’s very relationship‑oriented, with mills and refiners you may have known personally for decades, and the deliverable contract makes spreads central.
The oilseed complex has become more policy-driven due to biofuels mandates, particularly biodiesel mandates. You now need to scrutinise energy policy and fuel markets nearly as much as crop reports, because soybean oil, rapeseed oil, and others are increasingly connected to diesel. That policy aspect has introduced an additional layer to what was once a simpler story of agricultural supply and demand.
Throughout your career, where did you earn most of your money – flat price, basis, spreads, or supply chain management?
Most of my P&L has come from flat price—mainly from getting the major directional moves roughly right. Even today at Arasco, where we are processors and physical traders rather than speculators, 70–80% of our price exposure is linked to futures. If you cannot interpret the flat-price market, it becomes very difficult to understand spreads and basis.
That said, each product has its own P&L ‘engine’. In sugar, because of the deliverable nature of the contract, spreads carry much of the basis risk; the flat price and spreads can lead or lag each other depending on the situation. In grains, basis, logistics and value-chain margins (origination, elevation, storage, freight) are much more important on the physical side. However, the fundamental building blocks – supply and demand, money flows, policy, and weather – remain the same across products.
Most successful traders talk more about their bad trades than their good ones. Can you share a bad trade and what you learned?
I’ve had many. Any trader who claims never to have lost money is lying. One recurring mistake has been hedging in the wrong futures contract – for example, hedging Russian wheat with Chicago futures. Over the long term, the relationship might hold, but in the short term, the basis can move violently, so you end up adding risk instead of reducing it.
The other major theme is timing. Many traders, including myself, are driven by fundamental analysis. We are often correct about the concept, but too early in our trades. A recent example was soybeans versus corn around 2022–23: we recognised that the bullish story was turning, and we were ultimately correct, but the change took six months longer than we expected. Being “right but early” can still lead to bankruptcy if you size your position aggressively and can’t withstand the downturn.
Can you share three key lessons from your bad trades?
First, hedging instruments must truly match your underlying risk, not just look correlated on a chart.
Second, timing and position sizing can matter more than being fundamentally correct in the end.
Third, you learn far more from losses and near‑misses than from the trades where you just got lucky.
Many see hedging as a method to lower risk, but could it raise risk?
Absolutely. A poorly designed hedge can double your risk. If you hedge a physical position with the wrong contract or rely on a cross-commodity hedge based solely on historical correlations, you could face losses twice – once on the physical and once on the hedge.
I recall a proposal from years ago to trade corn against coal because a back-test indicated a relationship. On paper, the correlation appeared strong. However, the underlying drivers were entirely different: coal at that time was mostly a captive, contract-driven market linked to freight, whereas corn is a global, liquid agricultural market. We did not proceed with the trade, and it was the correct decision. Historical correlation without understanding the underlying economics can be dangerous.
You’ve mentored many individuals. What do young traders find most difficult to understand?
Three things stand out. First, tunnel vision: young traders tend to focus very narrowly on “their” product and desk, and underestimate how interconnected markets are. Sometimes, the move in your commodity is caused by something that appears unrelated – energy policy, freight, a currency, or a regional political event. Learning to look beyond your immediate market is essential.
Second, many young people believe that because they graduated with top marks, they should sit at a desk and start making money on day one. They underestimate how much time must be spent on “boring” foundational work: understanding contracts, logistics, quality specifications, local practices, and simply listening. A lot of good trading involves long, quiet hours of analysing numbers, challenging your own views, and discussing ideas with colleagues and analysts before you ever “pull the trigger.’
Third, discipline is key.
Critical thinking is essential: questioning your own ideas, avoiding attachment to any position, and maintaining genuine curiosity. The emotional rush of executing a trade is the least important part of the process; the careful thought that comes before it is where real value is created.
How important are client and supplier relationships?
If you treat clients purely as P&L opportunities, you may make money in the short term, but you will lose in the medium term. You should treat clients as partners in the supply chain. That means being honest, explaining risks clearly, and sometimes advising them not to do a trade that looks profitable for you but is inappropriate for them.
I recall an options trader attempting to sell a complex exotic structure to a wheat mill that did not understand the embedded currency risk. Technically, it appeared as “protection,” but it was exposing them to something they could not see. I stepped in and said we shouldn’t sell that product to that client. We probably lost some immediate revenue, but in the long run, you gain trust – and those clients return.
When you decide to enter a position, what separates success from failure?
After timing, the crucial factor is position size. You must align the size of the trade with both the conviction and the expected magnitude of the move. If the potential move is, say, 5%, you should not bet the farm, even if you feel you are “right.”
In our hedge fund days, when all the stars aligned (tight supply, uncovered demand, funds positioned the wrong way, clear policy or weather catalyst), we allowed larger positions because the risk‑reward was asymmetric. When the trade was more of a feeling or a tactical idea, we would still trade, but with much smaller size.
One example was a Minneapolis versus Chicago wheat spread in the mid‑2000s. High‑protein wheat had a supply problem, funds were short, and demand was very hand‑to‑mouth. We put on a relative‑value trade that worked extremely well. But even there, we had to respect the thin liquidity in Minneapolis – you cannot ignore market depth, or you become the market and expose yourself in a different way.
Are you more of a physical trader or a futures trader?
I enjoy both. The significant swings in P&L usually stem from futures and flat price if your predictions are correct, but physical trading offers its own benefits. In grains and oilseeds, the physical margin often derives from the value chain: origination, elevation, storage, financing, freight, and sometimes solutions such as bundled fertiliser or pre-financing for farmers. It’s more operationally demanding and requires a larger cost base, but it’s a rewarding field.
Futures trading has become more accessible because high‑quality data is more available and often free, compared with the 1980s, when much of the information was hidden or proprietary. However, flat‑price and spread trading are also much riskier and more competitive. You need to be honest with yourself about your risk appetite and psychological profile.
In some trading houses, recruits rotate through operations, finance and middle office before trading. At Cargill, many were put straight onto a desk. What’s the best approach for a young person?
I don’t know exactly how Cargill manages its graduate schemes today, but I am convinced that good physical traders must have a thorough understanding of contracts and logistics. In my case, I started in a middle‑office role, then handled execution and operations for a while, and only later moved into trading. That experience has been invaluable.
You truly understand the significance of contracts and logistics when unforeseen issues arise: a vessel stranded at anchorage, force majeure, a port accident, or a quality dispute. During the current tensions in the Middle East, for instance, managing routing, demurrage, insurance, bunkers, and draft restrictions becomes vital. If you have never worked in operations, you might not fully grasp the risks involved when signing a contract or agreeing to a freight deal.
You’ve recruited many people over your career. What do you look for in a young trader?
Early in my career, I concentrated on technical questions – maths, economics, market knowledge – and soon realised that many graduates knew more theory than I did. Over time, I shifted my focus to character, personality, and how someone fits into a team. I care much more about honesty, curiosity, and critical thinking than about whether someone can recite a pricing formula.
I often ask candidates about the biggest problem they’ve faced in life and how they solved it. I don’t need a trading story; I want to see how they react under pressure and how they deal with people.
Does background or nationality matter? Why, for instance, are there so many talented Argentinian traders?
I believe experiencing economic instability shapes your attitude towards risk. People from countries with repeated crises – Argentina being one example – develop a kind of survival instinct and adaptability that can be very valuable in trading. They are accustomed to uncertainty and improvisation.
That doesn’t mean people from stable, developed economies cannot be great traders. You find excellent traders in the UK, the Netherlands, Russia, China, and everywhere else. But I do notice that individuals who have personally put some of their own money at risk early in life – buying a few shares, starting a small venture, exposed to financial crisis, playing competitive sports – tend to have a more realistic, less academic relationship with risk. They know what it feels like to win and lose.
What final advice would you give to a young person considering a career in commodity trading, especially now?
Think of trading as a puzzle where you never have all the pieces. The pieces you do have are constantly shifting, appearing and disappearing. You need some basic maths, of course, but not a PhD. What you really require is curiosity, critical thinking, and a willingness to accept uncertainty.
Be prepared for a lifestyle that isn’t only about sleek offices and business‑class flights. This career can take you to wonderful destinations, but also to ports and regions experiencing political unrest, guerrilla conflicts, or economic crises. At times, it can be risky and uncomfortable. If a peaceful private banking life is your goal, this is not the right profession.
On the positive side, trading introduces you to many cultures, religions, and ways of thinking. That makes you more tolerant and broader‑minded over time. It pays well if you perform well, but more importantly, it expands your mind and character in ways few other jobs do. If you are curious, adventurous, and honest with yourself, it can be an incredibly rewarding career.
Thank you, Alex, for your time and input.
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