Just a few years ago, the emergence of automated tools, blockchain, data analytics, and digital transformation as a whole was groundbreaking in commodities – and at times, even controversial. Now, almost all sectors of global commodities are rapidly digitalising, whether that be through advanced analytics tools, blockchain technology, cloud computing, or even machine learning.
However, the softs and agricultural sector of commodities has lagged behind this trend and is probably the least automated part of the overall discipline. However, the implementation of digital tools in agricultural commodity trading is picking up pace. What does this look like and what does it mean for hiring trends?
What makes softs unique?
Softs and agricultural commodities as a subset are much more diversified than other sectors, because their markets are arguably the most affected by confounding noncontrollable factors such as weather, location, politics, and more. Therefore, it’s been difficult so far to embed digitalisation into the fabric of commodity trading in the sector.
Additionally, physical commodities face the issue of – generally speaking – lower levels of innovation and adoption of technology, owing to their being traded in the spot market. This is fundamentally different from trading stocks in the secondary markets, as in spot markets, large quantities of physical commodities must be insured, stored, transported, and received in order for a transaction to be completed. Obviously, this takes much longer than a transaction concerning non-tangible commodities. The lengthiness of this process also means that such commodities are more exposed to risk and price volatility.
But the opportunities that digitalisation in commodities presents are multifold and should no longer be ignored. It is presenting traders with better organizational efficiency and the chance for margin expansion, and is keeping the market healthy by allowing for new types of competition due to increased transparency in data. Businesses are able to respond to market changes in real-time thanks to the immediacy of data analysis. Even artificial intelligence is finding applications in commodity trading, picking up traction by predicting volatility in the markets or, in some cases, going so far as to initiate trades automatically, at a pace that humans simply can’t match. Some may still recoil at the prospect of automated trades, but there’s no denying that such a feat opens up new avenues of trading never seen before.
Predicted Hiring Trends
With the growing presence of technology in agricultural commodities, hiring patterns are expected to change. If you haven’t already begun building out your tech desk within your commodity firm, now’s the time to do so. The strategic roles of the Chief Information Officer and the Chief Technology Officer are growing in importance, with many firms having these individuals report directly to their CEOs. Furthermore, there’s a new generation of analysts and traders out there who are proficient at writing code – this skillset is already highly desirable and will continue to be so. Commodity firms are establishing entire desks to cultivate and develop candidates like this, building out their data capabilities and setting themselves up to be fit for the future.
Companies that invest in upskilling staff will maintain a competitive edge over others, but this should no longer come as a surprise. Off the back of The Great Resignation, many commodity firms are taking the tangible steps necessary to retain their staff and set them up not only for success in their respective firm, but throughout their careers. For example, Royal Dutch Shell is collaborating with online academic institution Udacity to upskill its workers and train them in artificial intelligence in preparation for the energy transition. They began this L&D initiative even before COVID-19, and now perhaps find themselves in a more stable position to navigate the future technologies that the energy transition will inevitably present than some of their competitors.
The physical and digital worlds of commodities are continuing to converge, presenting an exciting time to be involved in this sphere, especially in softs and ags. With talent pools growing and shifting, the softs and ags industry will soon catch up to other commodities sectors with automation and digital transformation.
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