Physical Trading

Discussion in 'Commodity Futures' started by leonel, Oct 8, 2008.

  1. leonel


    Hi, Im a student and im new here and i have some question about the physical trading.

    1-What is "basis on port" ?

    2-"Basis" is the potential profit margin of the physical trader?

    3-How hard is to deal with the big powerhouses like bunge or noble?

    4-Is physical trading more dangerous than futures?

    5-Is physical trading potentialy more lucrative than futures?

    6-How hard is to get a job in a big firm like glencore or Dreyfus?

    7-Wich are the best way to get buyers?

    8-What are "in voice broker" and how the physical trader use them?

    9-What is the average profit per ton for a succesfull trade?

    10-Where i can find a list of Physical merchants in europe and the US (for employment purpose)?

    Thanks in advance and sorry for my english guys.
  2. marcdoyo


    1. The "basis" is the difference between the cash price and the futures price. The port basis would be the difference between the cash price for the commodity at the port and the futures price.

    2. See 1

    3. It depends. Generally speaking its not a problem dealing with the bigger players. A smaller player might find it hard to compete on a pricing level.

    4. Physical trading has a different set of risks than futures. you have to worry about the credit worthiness of your customers. There is a whole supply chain to deal with, storage etc.

    5. It can be. a successful physical trader is able to buy the physical commodity from farmer, gin, elevator etc and sell to the end user at a higher price. They make a margin on every trade (or at least they try to). In Futures as a speculator you have no profit margin, you must create it yourself with each and every trade.

    6. Its hard. For the inexperienced the large firms have graduate and training programs, however they are competitive. Dreyfus in particular is very selective.

    7. not sure I understand this question.

    8. Not familiar with this

    9. This would vary greatly depending on the commodity.

    10. Google is your friend here. you already seem to know some of the big players. Most of them will have something on their website regarding their trainee programs and how to apply etc.