Monday, June 25, 2012

Signposts--Commodities Merchants Hiring Hedge Fund Trading Talent

From Reuters:
Growing commodities merchants recruit top traders
* Energy companies broaden reach into other commodities
* Commodities trading houses seek to diversify risk
* Less jobs for European traders, more in emerging markets
The landscape is changing for commodities merchants as global economic strength swings east, encouraging them to diversify into new products and increase scale while they also can skim the best traders off struggling hedge funds and banks.

Moves by European and U.S. trading houses to leverage and expand their businesses from a focus on only one or two markets have led to a flurry of recruitment of high-profile traders in metals and agricultural commodities.

"Capital is concentrated in the larger trading organisations who can afford to expand into new product areas. Small niche players are being squeezed out of the market as they can't get transaction finance," said Jakob Bloch, chief executive of recruitment firm Commodity.

In May, Barclays lost its commodities trading chief, Roger Jones, to Swiss trader Mercuria, which recently started to trade grains and agriculture products as it diversifies out of energy. More hires are expected.
"On the one hand, you want to diversify your exposure as much as possible," said a source at a London-based commodities brokerage.

"On the other hand, the same factors are influencing the same markets, so you can leverage your expertise in certain areas, whether it's a global network of offices, risk systems or their ability to access capital."
Mercuria has spent seven years trading refined energy products in China, giving it good knowledge of the markets, a license to trade and the confidence to trade other commodities.

Rival Swiss-based Trafigura has also expanded rapidly over the past two years and is now a major player in many commodities including oil, non-ferrous and bulk commodities.
On the other side, players that have traditionally focussed on agriculture have been trying to establish a stronger foothold in oil, Bloch said, including Cargill and Louis Dreyfus.

"There are others who are looking to expand specifically into the ags sector," Bloch said, without divulging names. "This is most likely as many people currently see this industry as the 'gold rush' ... based on growing food consumption."

The major trading houses decline to comment on strategy and recruitment.

"The big trading houses have always dominated, but they are now looking at owning more of the value chain. It's about decreasing their risk, and seeing opportunities to do that," said a partner at a commodities recruitment firm....MORE