The future of commodity trading

[Sparty]

https://www.mckinsey.com/industries/...b-c1f6ee44f6e9

The commodity trading industry has enjoyed an upward trend over the past five years. While all industries go through multiyear cycles of peaks and troughs, the industry’s prospects look excellent for the years ahead.

Indeed, commodity trading is on the cusp of the next normal. The energy transition now under way is an economic and physical transformation that cuts across and integrates the various global food, energy, and materials systems. From a commodity trading standpoint, this transformation will increase structural volatility, disrupt trade flows to open new arbitrages, redefine what it means to be a commodity, and fundamentally alter commercial relationships. All these developments will create unique opportunities and challenges for new and incumbent players alike.

In this article, we explore the trends underpinning commodity trading value pools, discuss five success factors and their potential implementation, and present our perspective on the three business models that could develop over time.