Commodity broker

Commodity brokers act as intermediary between buyers and sellers of movable and immovable property such as raw materials, livestock or real estate. They negotiate prices and receive a commission from the transactions. They research market conditions for specific commodities in order to inform their clients. They make bid offers and calculate the cost of transactions.

The duties of a commodity broker include, but are not limited to:

• Assessing the international commodities market to identify trends
• Developing reports and forecasts to guide investors
• Providing investment advice and recommending assets to investors
• Collaborating with stakeholders in the mining, transport, shipping and insurance industries
• Meeting with clients and international commodities suppliers
• Creating and implementing hedging strategies to help clients spread risk
• Evaluating new business opportunities
• Trading and negotiating prices and delivery details on behalf of clients
• Supervising a team of brokers and managing client accounts
• Maintaining and managing the exchange’s system and static data
• Performing account onboarding and maintenance functions
• Managing special projects and improving processes
• Investigating and resolving trade issues
• Liaising with clients and other stakeholders
• Providing excellent client support services

The following job titles also refer to commodity broker:

commodities dealers
commodities brokers
commodity dealer
commodity traders
commodities traders
commodity dealers
commodity trader
commodities broker

Commodity brokers work in a fast-paced environment where they buy and sell commodities contracts on behalf of their clients. They work in an office, usually in a large financial center such as New York City, London, or Tokyo.

Commodity brokers typically work long hours, often including evenings and weekends. They may also travel to meet with clients or to attend conferences and seminars. The work can be stressful, and commodity brokers must be able to make quick decisions and handle large sums of money.

Most commodity brokers have at least a bachelor’s degree. Some of the most common majors for commodity brokers are finance, economics and business administration. Some brokers choose to earn a master’s degree in business administration to further their career opportunities and increase their earning potential.

Commodity brokers typically receive on-the-job training after they are hired. This training may last for a few weeks to a month and may include shadowing a current commodities broker or a senior commodities broker. During this training, the new employee will learn about the company’s policies and procedures, the software they use and the commodities they trade. They will also learn about the different products they can offer clients and how to price them.

ISCO skill level is defined as a function of the complexity and range of tasks and duties to be performed in an occupation. It is measured on a scale from 1 to 4, with 1 the lowest level and 4 the highest, by considering:

• the nature of the work performed in an occupation in relation to the characteristic tasks and duties
• the level of formal education required for competent performance of the tasks and duties involved and
• the amount of informal on-the-job training and/or previous experience in a related occupation required for competent performance of these tasks and duties.

Commodity broker is a Skill level 3 occupation.

These occupations, although different, require a lot of knowledge and skills similar to commodity broker.

commodity trader
futures trader
foreign exchange broker
foreign exchange trader
securities underwriter

These occupations require some skills and knowledge of commodity broker. They also require other skills and knowledge, but at a higher ISCO skill level, meaning these occupations are accessible from a position of commodity broker with a significant experience and/or extensive training.

securities analyst
investment analyst
investment fund management assistant
corporate banking manager
middle office analyst

This knowledge should be acquired through learning to fulfill the role of commodity broker.

• International trade: The economic practise and study field that address the exchange of goods and services across geographic borders. The general theories and schools of thought around the implications of international trade in terms of exports, imports, competitivity, GDP, and role of multinational companies.
• Economics: Economic principles and practices, financial and commodity markets, banking and the analysis of financial data.
• Financial markets: The financial infrastructure which permits trading securities offered by companies and individuals govern by regulatory financial frameworks.
• Commercial law: The legal regulations that govern a specific commercial activity.

These skills are necessary for the role of commodity broker.

• Analyse energy market trends: Analyse data influencing the movement of the energy market, and liaise with the important stakeholders in the energy field in order to make accurate predictions and perform the most beneficial actions.
• Analyse market financial trends: Monitor and forecast the tendencies of a financial market to move in a particular direction over time.
• Perform financial risk management in international trade: Evaluate and manage the possibility of financial loss and non-payment following international transactions, in the context of foreign exchange market; apply instruments like letters of credit.
• Review investment portfolios: Meet with clients to review or update an investment portfolio and provide financial advice on investments.
• Analyse economic trends: Analyse developments in national or international trade, business relations, banking, and developments in public finance and how these factors interact with one another in a given economic context.
• Advise on financial matters: Consult, advise, and propose solutions with regards to financial management such as acquiring new assets, incurring in investments, and tax efficiency methods.
• Negotiate with stakeholders: Negotiate compromises with stakeholders and strive to reach the most beneficial agreements for the company. May involve building relationships with suppliers and customers, as well as ensuring products are profitable.
• Apply technical communication skills: Explain technical details to non-technical customers, stakeholders, or any other interested parties in a clear and concise manner.
• Negotiate sale of commodities: Discuss client’s requirements for buying and selling commodities and negotiate their sale and purchase in order to obtain the most beneficial agreement.
• Analyse financial risk: Identify and analyse risks that could impact an organisation or individual financially, such as credit and market risks, and propose solutions to cover against those risks.

This knowledge is sometimes, but not always, required for the role of commodity broker. However, mastering this knowledge allows you to have more opportunities for career development.

• Financial products: The different types of instruments that apply to the management of cash flow that are available on the market, such as shares, bonds, options or funds.
• Banking activities: The broad and continuously growing banking activities and financial products managed by banks ranging from personal banking, corporate banking, investment banking, private banking, up to insurance, foreign exchange trading, commodity trading, trading in equities, futures and options trading.
• Financial forecasting: The tool used in performing fiscal financial management to identify revenue trends and estimated financial conditions.
• International commercial transactions rules: Pre-defined commercial terms used in international commercial transactions which stipulate clear tasks, costs and risks associated with the delivery of goods and services.
• Statistics: The study of statistical theory, methods and practices such as collection, organisation, analysis, interpretation and presentation of data. It deals with all aspects of data including the planning of data collection in terms of the design of surveys and experiments in order to forecast and plan work-related activities.
• Modern portfolio theory: The theory of finance that attempts to either maximise the profit of an investment equivalent to the risk taken or to reduce the risk for the expected profit of an investment by judiciously choosing the right combination of financial products.
• Actuarial science: The rules of applying mathematical and statistical techniques to determine potential or existing risks in various industries, such as finance or insurance.
• Financial jurisdiction: Financial rules and procedures applicable to a certain location, whose regulatory bodies decide on its jurisdiction

These skills and competences are sometimes, but not always, required for the role of commodity broker. However, mastering these skills and competences allows you to have more opportunities for career development.

• Trace financial transactions: Observe, track and analyse financial transactions made in companies or in banks. Determine the validity of the transaction and check for suspicious or high-risk transactions in order to avoid mismanagement.
• Protect client interests: Protect the interests and needs of a client by taking necessary actions, and researching all possibilities, to ensure that the client obtains their favoured outcome.
• Maintain records of financial transactions: Collate all the financial transactions done in the daily operations of a business and record them in their respective accounts.
• Communicate with banking professionals: Communicate with professionals in the field of banking in order to obtain information on a specific financial case or project for personal or business purposes, or on behalf of a client.
• Negotiate sales contracts: Come to an agreement between commercial partners with a focus on terms and conditions, specifications, delivery time, price etc.
• Negotiate price: Arrange an agreement on price of products or services provided or offered.
• Operate financial instruments: Work with financial instruments such as stocks, bonds, mutual funds and derivatives.
• Build business relationships: Establish a positive, long-term relationship between organisations and interested third parties such as suppliers, distributors, shareholders and other stakeholders in order to inform them of the organisation and its objectives.
• Provide financial product information: Give the customer or client information about financial products, the financial market, insurances, loans or other types of financial data.
• Forecast economic trends: Gather and analyse economic data in order to predict economic trends and events.
• Handle financial transactions: Administer currencies, financial exchange activities, deposits as well as company and voucher payments. Prepare and manage guest accounts and take payments by cash, credit card and debit card.
• Negotiate buying conditions: Negotiate terms such as price, quantity, quality, and delivery terms with vendors and suppliers in order to ensure the most beneficial buying conditions.

3324 – Trade brokers

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References

1. Commodity broker – ESCO
2. Commodities Broker Job Description: Salary, Duties, & More – Climb the Ladder
3. What Is a Commodity Broker? | Indeed.com Singapore
4. Featured image: Photo by Tima Miroshnichenko from Pexels