Learning About The Commodities Market

It’s been one week at my new job as a mid-career switch and it feels like I’m a fresh graduate out of university with so much to learn. Thankfully, not on a fresh graduate pay.

It’s my first foray into learning the ins and outs of the commodities market, starting with cotton. It helped that I’ve already done CFA Level II and doing Level III now, so I’ve got the basics and the theory. But seeing the futures contracts, greek options, and VaR calculations and putting them altogether in one book that is compiled daily is a whole different level altogether. I also finally have my hands on a Bloomberg terminal too!

Did you know that the terminal comes with a special keyboard with slightly different keys?

I’m glad to have a very nurturing boss who has a wealth of experience to tap on and is very patient in explaining the concepts to me. Our calendars are booked with daily morning and evening one-hour “tutorials” for us. There’s so much for me to take in but it’s all really eye-opening how much is being taken in to shape our view of the prices of commodities. From weather conditions to union strikes, macroeconomic conditions to rumours, everybody is on a constant lookout for news that generates alpha and hopefully find their edge on the trading floor. I’ve even had to learn about the different grades and shipment processes too. And every commodity has its own quirks that’s not easily replicated, so I’m already taking it slowly by just starting with one.

I’m looking forward to getting up to speed soon (my boss gave me till end-September) so that I can start working on some of the projects that have been assigned to me. To be honest, I’ve always thought that my first step into the finance industry will be something that I’m more familiar with, like equities. So this commodities business is really throwing myself into the deep end of the pool. It helps that all that I’m doing for now is just to track daily prices and learn more about both the market and the business. At the same time, I sit in meetings and can already see myself value-adding with some of my programming skills, like writing automation scripts to make work that bit more efficient. So that’s all good.

For now, I have two takeaways from my first week at work:

  • Institutional investors/traders put in a lot of work and expertise before making any moves in the market. It’s almost near-impossible for retail investors to find any edge.
  • CBD food options are very very pricey. :/

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