Commodity brokers buy and sell physical commodities (crude oil, grain, metals, coffee, sugar) on a commission basis on behalf of private and commercial clients. Making money for clients should be the main goal of a commodity broker as they earn a commission on every trade they make. They balance the objectives of producers/buyers who are seeking consistency and speculators who accept risk in the market.
In addition they also deal in derivatives (futures and options), which are based on physical commodities.
What does a commodity broker do?
- Monitor international market performance by reviewing trade media.
- Interpret market reports.
- Meet with clients and providing investment advice and market recommendations.
- Trade on behalf of clients.
- Liaise with transport, shipping and insurance companies.
- Devise hedging strategies.
- Visit international suppliers.
- Negotiate price, specification and delivery details.
- Investigate new business openings.
Work conditions for commodity brokers
Travel: travel during working day is occasional. Absence from home at night is rare or never. Overseas work or travel is occasional.
Working hours: long with regular extra hours but not normally weekends or shifts.
Location: mainly in cities as there are a relatively small number of commodity brokers in Ireland.
Opportunities for self-employment: this is possible but can be expensive to set up.
Typical employers:
- Investment banks
- Commodity brokers
- Financial clearinghouses and exchanges.
Career development in commodity brokering
Advancement is by servicing more customers, gaining a higher volume of business & maintaining a consistent, profitable customer base. There is a shallow pyramid with few layers of management.
Degree subjects required
Open to non-graduates and graduates of any discipline. Communication skills and the desire to make money out of doing deals are more important than degree subject or class but numeracy is essential.
Other relevant degree subjects:
- Accounting
- Agricultural/Horticultural science
- Business/Management
- Economics
- Finance
- Mathematics
- Modern languages
- Statistics.
Training in commodity brokering
Training is traditionally on the job. For some broking jobs (such as in grain) the relevant trade association will arrange continuing professional education.
Tips for applications
Try a direct approach with a speculative application. Work experience is also recommended. It is useful to develop contacts through vacation work with a trader or a broker, informal visits and visits to the markets and exchanges. Advertised vacancies are few and far between.
Skills and qualities
- Ambitious, competitive and determined.
- Excellent numeracy skills.
- Ability to negotiate.
- Ability to react to market movements and respond to client needs.
- Good judgement and an entrepreneurial flair are essential.
