Commodity trading offer vs MFE vs SWE offer

[PongoShib]

Hi all,

As decisions are coming out for MFE programs, I was wondering what people's opinions are about commodity trading (ags specifically). I got an offer from Cargill earlier this month, and I'm not sure what to do. I'm currently a senior in undergrad, and, although commodities seem interesting, the starting pay for a top company in the field seems fairly low (~65k no bonus first year). And, of course, I'm from the east coast and I want to eventually move back to somewhere near nyc. I don't mind working in the midwest for a few years, but I'm not sure how compensation usually progresses in ags (if anyone has any idea please let me know, there seems to be not much public data on it). Other than that, I have an offer from a FANG company for around 180k all in (although not sure about SWE). For MFE, I'm waiting to here back from some of the programs I applied to. If I happen to get into a good program, I would probably want to try pursuing a S&T role at bank preferably in fixed income. Anyway, any help on choosing a direction would be much appreciated.

 

[longgamma]

Congratulations on the multiple offers and its quite a problem to have! I guess you have to do some soul-searching. Do you really like trading or the idea of being a trader? Don't want to appear rude but the front office sales/trading role in sell side have been in a decline since 2010. Most of the desks are purely agency with a little discretion (inventory optimization, divided curve trading, equity repo trading etc.) but no trader runs their own portfolio. That is why so many IBs are rushing to build central risk desks, where they can make real money in the name of 'hedging'.

Try to enter the buy side, CTAs or any hedge fund that trades commodities would be a great place if you really enjoy trading for a living. The real money and interesting work is in the buyside and sell side is getting automated away.

Idk about tech companies, but they do seem to be doing phenomenally well unlike European and Japanese mega banks.

 

[Onegin]

Just a data point, but 65k in Minnesota might go a long way.

 

[PongoShib]

Congratulations on the multiple offers and its quite a problem to have! I guess you have to do some soul-searching. Do you really like trading or the idea of being a trader? Don't want to appear rude but the front office sales/trading role in sell side have been in a decline since 2010. Most of the desks are purely agency with a little discretion (inventory optimization, divided curve trading, equity repo trading etc.) but no trader runs their own portfolio. That is why so many IBs are rushing to build central risk desks, where they can make real money in the name of 'hedging'.

Try to enter the buy side, CTAs or any hedge fund that trades commodities would be a great place if you really enjoy trading for a living. The real money and interesting work is in the buyside and sell side is getting automated away.

Idk about tech companies, but they do seem to be doing phenomenally well unlike European and Japanese mega banks.

Thanks for your response, and are there any hedgefunds doing well in the ag space? In addition, even if I did trade commodities, I was more interested in join BBs with a more robust presence in commodities. Do you think credit and more complicated FI products are going downhill as well?

 

[PongoShib]

Just a data point, but 65k in Minnesota might go a long way.

That is definitely true.

 

[longgamma]

Thanks for your response, and are there any hedgefunds doing well in the ag space? In addition, even if I did trade commodities, I was more interested in join BBs with a more robust presence in commodities. Do you think credit and more complicated FI products are going downhill as well?

From what I recollect, lot of banks exited commodities. That is saying something as Lloyd Blankflien had a commodities background. From my limited understanding, this was due to regulations reducing returns. Look up CTAs and returns as they invest a lot in commodities space and the market in general is a precursor to changes in economic activities. Also, as a trader you still have to track other markets for information and develop a macro view of the world. Credit trading desks are still around and doing pretty well, its mostly the low margin rates trading that is being shrunk as of now. Maybe talk with a headhunter or alumni in New York and ask for whats the market trend is like.

I hope you use Linkedin to figure our career path at Cargill and exit opportunities. One major advantage at working at a large institution is the sheer volume of transactions and scale of things is eye opening early on in your career. From my own experience, sell side isnt the best place to be now - look at HSBC, Deutsche, CS who all are exiting or shrinking sales/trading and everyone is lining up for US banks.

 

[binomial-torrent]

The FANG SWE offer could very easily be a stepping stone for a more prestigious, more well-paid quantitative trader role down the line, so I would take that into consideration as well. If you look on linkedin, the undergrads that get hired into quant research/trading roles all have SWE internships or worked as a SWE for FANG for a few years. My theory on that is either 1) they need the coding skills in research teams 2) they're using FANG as a signal or 3) both.