UK
Agricultural traders come out of the doldrums
13 March 2008
Financial firms are (ahem) ploughing money into agricultural commodities and the once-maligned trading roles are back in vogue.
With all the hoo-ha surrounding escalating oil prices, it’s easy to overlook the agricultural commodities like grain, oil seeds, coffee, cocoa and sugar, but they’re predicted to take off in 2008.
The latest quarterly review from the Bank for International Settlements reveals that trading on the agricultural futures and options market increased 16%, to 528 million contracts. Meanwhile, volumes of sugar futures traded in January on Liffe, the UK derivatives exchange, smashed the previous record by 23%.
Some soft commodities can be used to make bio-fuels, which is helping drive up the price.
Recruiters say that investment banks like Merrill Lynch and Macquarie are bolstering their agricultural commodities trading desks, while others are playing catch-up. But hedge funds are now cashing in, with Mulvaney Capital returning 21% on its crop commodities fund, and Armajaro Asset Management raising $500m for a soft commodities fund in November.
Riann Lazenby, recruiter, grains and oil seeds, at Commodities Appointments, says: “The interest from hedge funds and prop trading houses in traders has reached new levels because of the current phenomenal returns. This has put real pressure on the rather limited talent pool.”
And Randal Goldsmith, lead analyst at S&P, has tipped funds of hedge funds to join the party: “Many funds of hedge funds currently see the chance of making good returns from commodity trends, particularly in the agricultural sector. They believe that commodity trading advisors and global macro funds are the best way to play this.”
High-paying hedge funds are proving alluring to agricultural traders, who find they’re suddenly the headhunters’ new best friend, reckons Eric De Rothschild, director, agricultural commodities, at DNA Search: “It might be riskier, but because of the boom they can really cash in.”
An agricultural commodities trader can expect to bring in £75k-£120k base, with a 200-300% bonus in an i-bank, often guaranteed in the first year, says De Rothschild. A head of desk can expect up to £250k base, with an uncapped bonus in a hedge fund.
I've been trading crops for many a year now and I've never seen such a good market. There isn't a bit of barley I can't trade at the moment
Farmer Giles 13 Mar 2008
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