THE INSIDE OF TRADING
COMMODITY/GRAIN TRADERS ARE A VALUABLE LINK IN THE AG INDUSTRY
by Debbie Coakley, Contributing Editor
As the global population continues to climb, commodity/grain traders will play an even more valuable role in meeting food demands.
"Traders will be important facilitators for moving product through the food chain because the ag industry will need to supply larger quantities of commodities to satisfy world consumption," says Scott White, manager of futures execution and strategic planning for the Soybean Processing Division of St. Louis-based Bunge North America Inc. "My job is to use options, futures and business experience to add value to our business - which is to procure soybeans, process them and distribute soybean products into the domestic and global markets."
While White's title is a mouthful, his job can be summed up simply as a grain trader - a career he began 22 years ago as a trainee in Bunge's Danville, Ill., corn dry mill and soybean processing facility. Since then, he has worked in several key positions at Bunge North America, whose parent company, Bunge Ltd., is a White Plains, N.Y.-based integrated global agribusiness and food company.
White defines a trader as someone who buys or sells either a cash commodity or a type of futures or equity. But he adds that this job takes many forms, depending on what part of the business the trader works in. For instance, because White works for an industrial processor operating in the entire farm-to-consumer food chain, his job differs from that of traders who work for firms that solely buy and sell grain and trade futures on commodities such as soybeans and corn.
What does it take to be a trader? An agricultural economics degree with a specialization in marketing is a typical background. Agronomy classes are a bonus. "But the true learning comes after you've had experience in the business," says White, who earned a degree in teaching and taught school for a year before beginning his career at Bunge North America.
Good people skills are essential. "I have a lot of contact with all types of customers over the phone and in person," White reports. "I also spend a lot of time talking with phone clerks in our office at the Chicago Board of Trade, giving them futures orders, option orders and spreads."
The actual process of buying and selling commodities and futures is only part of a trader's job. White says he spends the bulk of his time managing Bunge's soybean processing business. "I look for opportunities in the marketplace and do strategic planning and budgeting for my division," he explains. "That's why it's important to have a background in the business - so you can understand where it is headed."
What's more, commodity traders must like tracking the weather. "If you ask my kids what my favorite television show is, they're bound to say the Weather Channel," White notes.
ON THE JOB
White usually arrives at the office at 7 a.m. He begins his day by looking at overseas markets. "I check what palm oil is doing, how European currencies and markets are trading, the movement of stock markets around the world and, of course, the weather."
Before the markets open at 9:30 a.m., White usually contacts customers and Bunge's facilities to see what is happening in the marketplace. "My goal is to figure out which set of variables the market is currently focused on."
While technology allows White to access more information faster, he has to determine which sources he can have confidence in. "When I hear market information from someone, I need to know their track record."
The goal of White's work is to add value to the soybeans Bunge purchases at the company's facilities throughout the United States. "I use futures to hedge those risks and lock in an acceptable margin in the process," he explains.
FUTURE FOR TRADERS
Because of the inherent uncertainty in the commodities business, White says traders will continue to play a vital role in managing risks. "Everything I do - from trading futures to hedging those positions - comes back to trying to determine where the market is going," White explains. "So many factors affect my job."
And that thrill is White's favorite part of his work. "No two days are the same," he says. "Lack of rain in Argentina, a flooded Mississippi River blocking transportation or a drought in Iowa all impact my job." AM
Debbie Coakley is a free-lance writer based in Warrenville, Ill.