What is commodity trading?

It is a specific sector which has a lot of different operations which need to be managed depending on the commodity traded – for example, coffee, grain, rice, sugar, cotton, vegetable oils (soft commodities) and oil, gas, coal (energy commodities).

On January 31st 2013, Ampersand World SA, a recruiting company specializing in Trading, organized ‘The Journey from Contract to Payment: Understanding the context of the Trading Industry', a training course for professionals which covered the core elements of trading operations.

I had the pleasure of attending and interviewing Eric Grolimund, who conducted the training course. Mr Grolimund worked with one of the biggest trading companies in the Agricultural, Sugar and Ethanol sectors in Geneva for 23 years and his last position was in Execution at Gavilon, Geneva. Here, he shares his expertise and information about this relatively unknown field.

What is Commodity Trading in Geneva?

Commodity Trading in Geneva is a community of businesses which trade in raw materials such as oil, coal, gas, sugar, coffee, cotton, grain and rice. It accounts for approximately 9000 employees working in 500 companies of all different sizes. As you can see, this industry has a big impact on the local economy. Commodity Trading itself acts as a business of intermediaries between producers and importers to provide sourcing, transportation, storage and distribution facilities for the commodities along the supply chain, taking into consideration risk factors, pricing mechanisms and financing aspects.

Are you a specialist in Trading?

Well actually, I am not personally a Trader, I am a specialist in trading operations. This means I can explain about trading in general but not specifically, and also talk about Risk Management, Trade Finance, and the legal aspects attached to Trading Operations.

Can you give some examples of your specialty in the Commodity Trading industry?

My specialty is specifically in sugar and generally in grain and dry commodities. In Geneva, we analyse the market and make sure that we procure commodities in specific producing areas and facilitate the transport to where the commodity is needed.

What was your motivation in giving the course in Commodity Trading at Ampersand-World?

My motivation is specifically because I can see that the level of knowledge and expertise in Trading seems to be declining. I have made it a personal point to share what I know. It really makes me happy to explain to the younger generation what I have taken years to learn. In fact, we never stop learning.

What recommendations could you give to people not familiar with Commodity Trading but interested in making a career in this business sector?

If I had recommendations, I would say that you must have a high degree of self motivation and a personal interest in what you do. You need a lot of energy to do things that may seem sometimes useless or frustrating but overall, what you need to have is a high degree of curiosity. You need to be able to see your job from a different perspective because everything that you do has an impact that you don't necessarily see, either within the company or outside. So remain open, keep your eyes and ears alert to what you can learn and also about what you can share with others. Communication is the essence. If I had to recruit somebody now, I would mainly focus on their English communication skills because that is the most important thing. If you cannot clearly express your needs, your requirements and your ideas, there is no way that you can actually be efficient.

In your opinion, what are the characteristics of Commodity Trading in Geneva compared to other countries?

For Geneva, I think the main characteristics are the strong combination of a reservoir of good professionals, good trade finance support from the banks with their complete understanding of trading requirements, and a concentration of other related services like inspection, shipping and insurance linked with a high degree of professionalism. There are of course other trading hubs like London, New York, Hong Kong and Singapore, but certainly not the same concentration of services together in the same place. This makes Geneva a good place to set up a trading business.

Is there a difference between the types of risk that exist in trading different commodities?

Operational risks may be different depending on the commodity. Oil products have obviously higher risk factors because of possible pollution, contamination, explosion or fire. Oil is also moved in large volumes and therefore its value is huge. A loss or a non-payment can have serious financial consequences.

On the other hand, food products have specific health related technicalities that can be very strict. On documentary aspects, oil is simpler since a sole letter of indemnity can be presented to cash the transaction, whereas other commodities in general must be paid against a complete set of contract conforming documents.

How many years of experience are needed before being considered as a senior person in this field?

I do not think it is a question of years but more a question of attitude. I have seen people with just 4-5 years of experience who have the maturity of somebody with a lifelong background in the sector. It is a question of how you look at your job and how you get interested in developing your knowledge and skills. If you want me to give you a specific figure, I would say that you can achieve a good level of performance in about 5-10 years.

What do you think is the most important position in a Commodity Trading Company and why?

All the positions are important in this sector. We have front office (the trader), middle office and back office posts. If you remove one, nothing works. Without the trader, there is no contract, there is no business. But what is the good of getting the business if you have nobody behind it to execute it, or to do the accounting for it, or to obtain the financing and manage the cash-flow? Nothing would work. The wheel has to be greased. Without grease and all the parts of the wheel, it would never go round.

How can someone make a career in Commodity Trading?

By having a lot of goodwill, dedication, flexibility in your availability, and most of all patience. This is very important because these days people have huge expectations, and I think that this is a general life lesson. If you expect something in return for your actions, most of the time you will be frustrated. This is a business where you need personal dedication. You really have to be strong and dynamic and spend a lot of time on the job, but you don't necessarily always get the anticipated reward. So basically, you have to be patient, climb up the ladder step by step and eventually if everything goes well, recognition will come.

What are the specific skills, knowledge and qualities you need to work in the soft commodities and raw material sectors?

All I expect from somebody in this business is for them to be interested, curious, dynamic, proactive and to think outside the box. If you have all these qualities, you don’t need specific skills, diplomas or degrees; anybody can do it. I have seen people coming into the field from information technology, from architecture, from life and home insurance, from areas which have nothing to do with trading. I have seen people without any professional qualifications; all it takes is your personal skills.

With your many experiences in Commodity Trading, what advice could you give in terms of CV content or during an interview for junior people who want to work in this sector?

While I am not a specialist on CVs, for me, the CV has to be one page, very concise and very specific about behavioral skills and contain a brief description of the career path. For me, a CV that has too many details about past jobs becomes difficult to read and recruiters do not really have the time. So, you have to put down the essence of what you know and how you behave.

The best thing to do in the interview is to be relaxed. If you are stressed, you can send a very bad message to the interviewer. The most important thing is to listen to what the interviewer asks and make sure that you respond well and not say anything that counts against you.

How can a junior who doesn’t have much experience find a job in this sector?

Networking is the best thing to do because today, anyone can post a CV on a website or send it to a company. If you don’t have a contact who supports your application, it will not go very far. There are so many applicants for one specific job. You have to make sure you expand your network so you can get the right support. Recruitment agencies are also a good connection, but choose those that specialize in the sector that you are looking at.